214 Park Street South Melbourne, VIC 3205 ASX Release For ... · 214 Park Street South Melbourne, VIC 3205 T +61 3 9268 7000 ASX Release. 13 December 2019 . SCHEME BOOKLET REGISTERED

QMS Media Limited

214 Park Street South Melbourne, VIC 3205 T +61 3 9268 7000 www.qmsmedia.com

ASX Release 13 December 2019

SCHEME BOOKLET REGISTERED WITH ASIC

QMS Media Limited (ASX:QMS) refers to its announcement dated 12 December 2019 in which it advised that the Federal Court had made orders approving: • the dispatch of a Scheme Booklet to QMS shareholders in relation to the previously announced Scheme

of Arrangement with Shelley BidCo Pty Ltd, an entity controlled by Quadrant Private Entity and its institutional partners (Scheme); and

• the convening of meetings of QMS shareholders to consider and vote on the Scheme. The Scheme Booklet has been registered today by the Australian Securities and Investments Commission. A copy of the Scheme Booklet, including the Independent Expert's Report and the notices of the Scheme Meetings, is attached to this announcement and will be dispatched to QMS' shareholders before Thursday 19 December 2019. Key events and indicative dates The key events (and expected timing of these) in relation to the approval and implementation of the Scheme are as follows:

Event Date

Scheme Booklet dispatched to QMS shareholders Before Thursday 19 December 2019

General Scheme Meeting 10.00am on Thursday 6 February 2020

Rollover Shareholders Scheme Meeting Thursday 6 February (immediately following the General Scheme Meeting)

Second Court Hearing Monday 10 February 2020

Effective Date Tuesday 11 February 2020

Scheme Record Date 5.00pm on Friday 14 February 2020

Implementation Date Friday 21 February 2020 Note: All dates following the date of the General Scheme Meeting and the Rollover Shareholders Scheme Meeting are indicative only and, among other things, are subject to all necessary approvals from the Court and any other regulatory authority and satisfaction or (if permitted) waiver of all conditions precedent in the Scheme Implementation Deed. QMS reserves the right to vary the times and dates set out above. Any changes to the above timetable will be announced on the ASX and notified on QMS' website at https://www.qmsmedia.com/investors/quadrant-acquisition/. QMS Shareholders who have elected to receive communications electronically will receive an email with links to where they can download the Scheme Booklet and lodge their proxies for the relevant Scheme Meeting online. QMS Shareholders who have not made such an election will be mailed a printed copy of the Scheme Booklet and proxy forms for the relevant Scheme Meeting.

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Further information QMS shareholders can obtain further information in relation to the Scheme by calling the QMS Shareholder Information Line on 1300 069 339 (within Australia) or +61 3 9415 4275 (outside Australia) between 8.30am and 5.00pm (Melbourne time) on business days. *** For more information, please contact: Investor & Media Relations Malcolm Pearce QMS Media Ltd T: +61 3 9268 7000 [email protected] About QMS

QMS Media Limited is a publicly listed company on the ASX. QMS is a leading outdoor media company in Australia, New Zealand and Indonesia, specializing in premium landmark digital and static billboards, street furniture, and sport, airport and transit media. QMS’ three distinct business segments of QMS Australia, Mediaworks and QMS Sport continues to set QMS apart from the rest of the industry with each of the business segments having its own unique value proposition, growth profile and scalability.

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Your Directors unanimously recommend that you vote in favour¹ of the Scheme in the absence of a Superior Proposal, subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders. The Scheme Meetings are scheduled to be held as follows: (a) General Scheme Meeting:

10.00am on Thursday, 6 February 2020 at The RACV Club, 501 Bourke St, Melbourne VIC 3000; and

(b) Rollover Shareholders Scheme Meeting: immediately after the General Shareholders Meeting on Thursday, 6 February 2020 at The RACV Club, 501 Bourke St, Melbourne VIC 3000.

This Scheme Booklet is important and requires your prompt attention. You should read it in its entirety, and consider its contents carefully, before deciding whether or not to vote in favour of the Scheme. If you are in any doubt about what you should do, you should consult with a financial, legal, taxation or other professional adviser. If you have any questions in relation to this Scheme Booklet or the Scheme, please contact the QMS Shareholder Information Line on 1300 069 339 (within Australia) or +61 3 9415 4275 (outside Australia) between 8.30am and 5.00pm (Melbourne time) on Business Days. This Scheme Booklet has been sent to you because you are shown in the QMS Share Register as holding QMS Shares. If you have recently sold all of your QMS Shares, please disregard this Scheme Booklet.

QMS Media Limited ACN 603 037 341

in relation to the proposed acquisition of QMS Media Limited by BidCo, by way of a Scheme of Arrangement

SCHEME BOOKLET

Financial Advisor Legal Advisor[1] In respect of the recommendations of Barclay Nettlefold and David Edmonds, QMS Shareholders should have regard to the fact that, if the Scheme is implemented, Barclay Nettlefold and David Edmonds will receive benefits as further detailed in Section 2.

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QMS MEDIA LIMITED | SCHEME BOOKLET2

TABLE OF CONTENTSIMPORTANT NOTICES 4

KEY DATES 7

SECTION 1 | CHAIRMAN’S LETTER 9

SECTION 2 | IMPORTANT INFORMATION REGARDING DIRECTORS’ RECOMMENDATIONS 14

2.1 Barclay Nettlefold 14

2.2 David Edmonds 14

SECTION 3 | KEY CONSIDERATIONS RELEVANT TO YOUR VOTE 16

3.1 Summary of reasons why you might vote for or against the Scheme Resolution 16

3.2 Why your Directors recommend that you should vote in favour of the Scheme 17

3.3 Why you may wish to vote against the Scheme 20

3.4 Other considerations relevant to your vote on the Scheme 21

SECTION 4 | FREQUENTLY ASKED QUESTIONS 23

SECTION 5 | OVERVIEW OF THE SCHEME AND SCHEME IMPLEMENTATION DEED 32

5.1 Scheme 32

5.2 Scheme Consideration 32

5.3 Final Dividend 32

5.4 Key steps in the Scheme 33

5.5 Summary of Scheme Implementation Deed 35

5.6 How QMS will respond to Competing Proposals 39

SECTION 6 | INFORMATION ABOUT QMS 416.1 Group Overview 41

6.2 Overview of business segments 42

6.3 Board and Senior Management 45

6.4 Corporate governance 46

6.5 Capital structure 47

6.6 Group Structure 48

6.7 Recent QMS share price performance 50

6.8 Financial information 50

6.9 CY2019 guidance 54

6.10 Material changes to QMS’ financial position since 30 June 2019 54

6.11 QMS Director’s intentions for the business of QMS 54

6.12 Risks relating to QMS’ business 54

6.13 Publicly available information 55

6.14 Information about QMS 55

SECTION 7 | INFORMATION ABOUT HOLDCO AND BIDCO 58

7.1 Introduction 58

7.2 Overview of Quadrant Private Equity 58

7.3 Overview of BidCo and HoldCo 58

7.4 Directors 59

7.5 Funding of the Scheme Consideration 60

7.6 BidCo’s intentions following implementation of the Scheme 61

7.7 Voting and Rollover Agreements 62

7.8 HoldCo Shares to be issued to Rollover Shareholders 63

7.9 Additional information about BidCo, Quadrant Private Equity and the Rollover Shareholders 65

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QMS MEDIA LIMITED | SCHEME BOOKLET 3

SECTION 8 | RISKS 678.1 Introduction 67

8.2 General investment risks 67

8.3 Specific risks associated with your current investment in QMS Shares 67

SECTION 9 | TAXATION IMPLICATIONS OF THE SCHEME 72

9.1 Introduction 72

9.2 Taxation Consequences of the Final Dividend 73

9.3 Taxation Consequences of Disposal of QMS Shares 74

9.4 GST 75

9.5 Stamp Duty 75

SECTION 10 | ADDITIONAL INFORMATION 7710.1 Interests of QMS Directors in

QMS securities 77

10.2 Marketable securities in a Quadrant Group Member held by, or on behalf of, QMS Directors 77

10.3 Payments and other benefits to directors, secretaries or executive officers of QMS in connection with retirement or loss of office 78

10.4 Interests of QMS Directors in contracts of BidCo 78

10.5 Other agreements or arrangements with QMS Directors relating to the Scheme 78

10.6 Suspension of trading of QMS Shares 79

10.7 Deed Poll 79

10.8 QMS Performance Rights 79

10.9 ASIC Relief 80

10.10 Consents and disclosures 80

10.11 No unacceptable circumstances 80

10.12 No other information material to the making of a decision in relation to the Scheme 80

10.13 Supplementary information 81

10.14 Transaction costs 81

10.15 Confidentiality Deed 81

SECTION 11 | GLOSSARY AND INTERPRETATION 8311.1 Glossary 83

11.2 Interpretation 87

ANNEXURE A | INDEPENDENT EXPERT’S REPORT 90

ANNEXURE B | SCHEME OF ARRANGEMENT 184

ANNEXURE C | DEED POLL 205

ANNEXURE D | NOTICE OF GENERAL SCHEME MEETING 214

ANNEXURE E | NOTICE OF ROLLOVER SHAREHOLDERS SCHEME MEETING 219

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QMS MEDIA LIMITED | SCHEME BOOKLET4 IMPORTANT NOTICES

IMPORTANT NOTICES Nature of this Scheme BookletThis Scheme Booklet provides QMS Shareholders with information about the proposed acquisition of QMS by BidCo (which is an entity controlled by Quadrant Private Equity) by way of a scheme of arrangement between QMS and Scheme Shareholders under Part 5.1 of the Corporations Act. You are being asked to vote on the Scheme and should review all of the information in this Scheme Booklet carefully, including the Independent Expert’s Report in Annexure A. Section 3.2 sets out the reasons why you should vote in favour of the Scheme and Section 3.3 sets out the reasons why you may wish to vote against the Scheme.

This Scheme Booklet sets out the manner in which the Scheme will be considered and implemented (if all of the Conditions Precedent are satisfied or (if permitted) waived). It also includes information which the QMS Board believes is material to the decision of QMS Shareholders as to how to vote in relation to the Scheme and other information prescribed by law.

This Scheme Booklet is not a disclosure document under Chapter 6D of the Corporations Act.

If you no longer hold any QMS Shares, please disregard this Scheme Booklet as you will not be entitled to vote at the Scheme Meetings.

Defined termsTerms used in this Scheme Booklet which are capitalised are defined in Section 11, or otherwise in the Sections in which they are used. The documents reproduced in the Annexures to this Scheme Booklet have their own defined terms, which may differ from Section 11.

All diagrams, charts, graphs and tables appearing in this Scheme Booklet are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in diagrams, charts, graphs and tables is based on information available at the date of this document.

No investment adviceThe information contained in this Scheme Booklet does not constitute financial product advice and has been prepared without reference to your own specific investment objectives, financial situation, taxation position or particular needs. It is important that you read this Scheme Booklet in its entirety before making any decision as to whether or not to vote in favour of the Scheme. You should consider taking advice from financial, legal, taxation or other professional advisers.

Not an offerThis Scheme Booklet does not constitute or contain an offer to QMS Shareholders, or a solicitation of an offer from QMS Shareholders, in any jurisdiction.

Foreign jurisdictionsThe release, publication or distribution of this Scheme Booklet in jurisdictions outside of Australia may be restricted by law or regulation and persons outside of Australia who come into possession of this Scheme Booklet should seek advice on, and observe, any applicable restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations. QMS disclaims all liability to persons who fail to comply with those restrictions.

This Scheme Booklet has been prepared in accordance with Australian law and the information contained in this Scheme Booklet may not be the same as that which would have been disclosed if this Scheme Booklet had been prepared in accordance with the laws and regulations of another jurisdiction. No action has been taken to register or qualify this Scheme Booklet or any aspect of the Scheme in any jurisdiction outside of Australia.

QMS Shareholders who are resident outside of Australia and/or who are nominees, trustees or custodians for beneficial holders resident outside of Australia are encouraged to seek independent advice as to how they should proceed, including specific taxation advice in relation to the Australian and overseas taxation implications of their participation in the Scheme.

Regulatory informationThis Scheme Booklet is the explanatory statement for the scheme of arrangement between QMS and the Scheme Shareholders for the purposes of section 412(1) of the Corporations Act. A copy of the proposed Scheme is included in this Scheme Booklet in Annexure B.

A copy of this Scheme Booklet was provided to ASIC for examination in accordance with section 411(2)(b) of the Corporations Act. It was then lodged with and registered by ASIC under section 412(6) of the Corporations Act before being sent to QMS Shareholders.

ASIC has been requested to provide a statement, in accordance with section 411(17)(b) of the Corporations Act, that ASIC has no objection to the Scheme. If ASIC provides that statement, it will be produced to the Court at the time of the Second Court Hearing to approve the Scheme. Neither ASIC nor any of its officers takes any responsibility for the contents of this Scheme Booklet.

A copy of this Scheme Booklet will be lodged with ASX. Neither ASX nor any of its officers take any responsibility for the contents of this Scheme Booklet.

Important notice associated with the Court order under section 411(1) of the Corporations ActA copy of this Scheme Booklet has been lodged with the Court to obtain an order of the Court approving the convening of the Scheme Meetings. Orders made by the Court are made under section 411(1) of the Corporations Act.

The fact that the Court has ordered that the Scheme Meetings be convened and has directed that this Scheme Booklet accompany the Notices does not mean that the Court:

� has formed any view as to the merits of the proposed Scheme or as to how QMS Shareholders should vote (on this matter QMS Shareholders must reach their own conclusion);

� has prepared, or is responsible for, the content of this Scheme Booklet; or

� has approved or will approve the terms of the Scheme.

The order of the Court that the Scheme Meeting be convened is not, and should not be treated as, an endorsement by the Court of, or any other expression of opinion by the Court on, the Scheme.

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QMS MEDIA LIMITED | SCHEME BOOKLET 5IMPORTANT NOTICES

Notices of Scheme MeetingsThe Notice of General Scheme Meeting for General Shareholders is set out in Annexure D, and the Notice of Rollover Shareholders Scheme Meeting for Rollover Shareholders is set out in Annexure E.

A reference to “the Scheme Booklet” in each of the Notice of General Scheme Meeting and the Notice of Rollover Shareholders Scheme Meeting will be taken to include any supplementary scheme booklet released in relation to the Scheme.

QMS Shareholders’ right to appear at the Second Court HearingAt the Second Court Hearing, the Court will consider whether to approve the Scheme following the votes at the Scheme Meetings.

Any QMS Shareholder may appear at the Second Court Hearing, expected to be held on Monday, 10 February 2020 at the Federal Court of Australia, 305 William Street, Melbourne VIC 3000.

Any QMS Shareholder who wishes to oppose approval of the Scheme at the Second Court Hearing may do so by filing with the Court and serving on QMS a notice of appearance in the prescribed form together with any affidavit that the QMS Shareholder proposes to rely on. The notice of appearance and affidavit must be served on QMS at its address for service at least one day before the Second Court Hearing. The address for service for QMS is c/- Lander & Rogers Lawyers, Level 12, 600 Bourke St, Melbourne VIC 3000 (attention: Greg McKenzie).

If you wish to oppose approval of the Scheme at the Second Court Hearing you should seek professional advice as to how to do this.

Effect of roundingCertain figures in this Scheme Booklet are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Scheme Booklet.

Responsibility statementQMS has been solely responsible for preparing the QMS Information. The QMS Information concerning QMS and the intentions, views and opinions of QMS and the QMS Directors contained in this Scheme Booklet has been prepared by QMS and the QMS Directors and is the responsibility of QMS.

The Quadrant Group and its directors and officers do not assume any responsibility for the accuracy or completeness of any QMS Information or the Independent Expert’s Report (or any information contained therein).

The Quadrant Group has been solely responsible for preparing the Quadrant Information. The Quadrant Information concerning the Quadrant Group and the intentions, views and opinions of any Quadrant Group member contained in this Scheme Booklet have been prepared by BidCo and is the responsibility of BidCo.

The QMS Group and its directors and officers do not assume any responsibility for the accuracy or completeness of any Quadrant Information.

KPMG has provided and is responsible for the information contained in Section 9. Neither QMS nor the Quadrant Group assumes any responsibility for the accuracy or completeness of the information contained in Section 9. KPMG does not

assume any responsibility for the accuracy or completeness of the information contained in this Scheme Booklet other than that contained in Section 9.

Lonergan Edwards & Associates Limited (ABN 53 095 445 560) has prepared the Independent Expert’s Report in relation to the Scheme and takes responsibility for that report. The Independent Expert’s Report is set out in Annexure A.

Computershare Investor Services Pty Limited (ACN 078 279 277) (Computershare) has had no involvement in the preparation of any part of this Scheme Booklet other than being named as the Share Registry. Computershare has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for, any part of this Scheme Booklet.

External websitesUnless expressly stated otherwise, the content of QMS’ and Quadrant Private Equity’s website does not form part of this Scheme Booklet and QMS Shareholders should not rely on any such content for the purposes of the Scheme.

Tax Implications of the SchemeIf the Scheme becomes effective and is implemented, there will be tax consequences for Scheme Shareholders which may include tax being payable on any gain on disposal of QMS Shares. For further detail about the general tax consequences of the Scheme, refer to Section 9.

The tax treatment may vary depending on the nature and characteristics of each Scheme Shareholder and their specific circumstances. In addition, the tax treatment for Rollover Shareholders may differ as a result of receiving any Scrip Consideration. Accordingly, Scheme Shareholders should seek professional tax advice in relation to their specific circumstances.

Privacy and personal informationQMS and its agents and representatives may collect personal information in the process of implementing the Scheme. Such information may include the name, contact details and shareholdings of QMS Shareholders and the name of persons appointed by those persons to act as a proxy, attorney or corporate representative at the Scheme Meetings. The collection of some of this information is required or authorised by the Corporations Act.

The primary purpose of the collection of personal information is to assist QMS to conduct the Scheme Meetings and to implement the Scheme. Personal information of the type described above may be disclosed to the Share Registry, print and mail service providers, authorised securities brokers, any Quadrant Group Member, QMS and its Related Bodies Corporate, and QMS’ and the Quadrant Group’s advisers and any other service provider to the extent necessary to effect the Scheme.

QMS Shareholders have certain rights to access personal information that has been collected. QMS Shareholders should contact the Share Registry in the first instance, if they wish to access their personal information. If the information outlined above is not collected, QMS may be hindered in, or prevented from, conducting the Scheme Meetings or implementing the Scheme. QMS Shareholders who appoint a named person to act as their proxy, attorney or corporate representative should ensure that they inform that person of these matters.

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QMS MEDIA LIMITED | SCHEME BOOKLET6 IMPORTANT NOTICES

Disclaimer as to forward-looking statementsThis Scheme Booklet contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements.

All forward-looking statements in this Scheme Booklet reflect views only as at the date of this Scheme Booklet, and generally may be identified by the use of forward-looking words such as “believe”, “aim”, “expect”, “anticipate”, “intending”, “foreseeing”, “likely”, “should”, “planned”, “may”, “estimate”, “potential”, or other similar words. Similarly, statements which describe QMS’ or BidCo’s objectives, intentions, plans, goals or expectations are or may be forward-looking statements.

Any statements contained in this Scheme Booklet about the impact that the Scheme may have on QMS’ operations and its results, and the advantages and disadvantages which are anticipated to result from the Scheme, are also forward-looking statements.

All forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from the anticipated results, performance or achievements, expressed, projected or implied by those statements. Deviations as to future results, performance and achievements are both normal and to be expected.

Although QMS believes that the views reflected in any forward-looking statements included in the QMS Information have been made on a reasonable basis, no assurance can be given that such views will prove to have been correct.

Although the Quadrant Group believes that the views reflected in any forward-looking statements included in the Quadrant Information have been made on a reasonable basis, no assurance can be given that such views will prove to have been correct.

None of the QMS Group, the Quadrant Group, the QMS Group’s officers, the Quadrant Group’s officers, any persons named in this Scheme Booklet with their consent or any person involved in the preparation of this Scheme Booklet makes any representation or warranty (express or implied) as to the likelihood of fulfilment of any forward-looking statement, or any events or results expressed or implied in any forward-looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any forward-looking statement.

All subsequent written and oral forward-looking statements attributable to any QMS Group Member or any Quadrant Group Member or any person acting on their behalf are qualified by this cautionary statement.

Subject to any continuing obligations under relevant laws or the Listing Rules, the QMS Group and the Quadrant Group do not give any undertaking to update or revise any such statements after the date of this Scheme Booklet, to reflect any change in expectations in relation thereto or any change in events, conditions or circumstances on which any such statement is based.

RisksThe operations and financial performance of QMS are subject to various risks, including those summarised in this Scheme Booklet (refer to Section 8), which may be beyond the control of QMS and/or BidCo. Those risks and uncertainties include factors and risks specific to the industry in which QMS operates as well as general economic conditions, prevailing exchange rates and interest rates and conditions in the financial markets. As a result, the actual results of operations and earnings of QMS whether or not the Scheme is implemented, as well as the actual advantages or disadvantages of the Scheme, may differ significantly from those which are set out in this Scheme Booklet in respect of timing, amount or nature and anticipated results may never be achieved.

QMS Shareholders should note that the historical financial performance of QMS is no assurance of future financial performance of QMS (whether the Scheme is implemented or not).

Times and datesUnless otherwise stated, all times referred to in this Scheme Booklet are times in Melbourne, Australia.

All dates following the date of the Scheme Meetings are indicative only and are subject to the Court approval process and the satisfaction or, where capable, waiver of the Conditions Precedent to the implementation of the Scheme. The Conditions Precedent are summarised in Section 5.5.1 and set out in full in clause 3.1 of the Scheme Implementation Deed and clause 3.1 of the Scheme.

Currency and exchangeUnless otherwise stated, all dollar amounts in this Scheme Booklet are in Australian Dollars and all share prices and trading volumes refer to QMS Shares trading on the ASX.

Date of this Scheme BookletThis Scheme Booklet is dated 13 December 2019.

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QMS MEDIA LIMITED | SCHEME BOOKLET 7KEY DATES

KEY DATESEvent Date

First Court Date

The date on which the Court made orders convening the Scheme Meetings

10.15am on Thursday, 12 December 2019

Election Time (for Rollover Shareholders only)

Latest time and date by which Election Forms must be received from Rollover Shareholders Electing to receive the Scrip Consideration

5.00pm on Monday, 3 February 2020

Scheme Meetings Proxy Forms

Last date and time for receipt of Proxy Forms (including proxies lodged online), powers of attorney or certificates of appointment of body corporate representatives for the Scheme Meetings

10.00am on Tuesday, 4 February 2020

Voting Eligibility Date

Time and date for determining eligibility to vote at the Scheme Meeting

5.00pm on Tuesday, 4 February 2020

General Scheme Meeting

To be held at The RACV Club, 501 Bourke St, Melbourne VIC 3000

10.00am on Thursday, 6 February 2020

Rollover Shareholders Scheme Meeting

To be held at The RACV Club, 501 Bourke St, Melbourne VIC 3000 immediately following the General Scheme Meeting

Thursday, 6 February 2020

If the Scheme is approved by QMS Shareholders at the Scheme Meetings and all other conditions are satisfied by that time

Second Court Date

QMS to apply for Court orders approving the Scheme

Monday, 10 February 2020

Effective Date

The date on which the Scheme becomes Effective and is binding on QMS Shareholders

The Court orders will be lodged with ASIC and announced on ASX

Last day of trading in QMS Shares - QMS suspended from trading on ASX from close of trading

Tuesday, 11 February 2020

Scheme Record Date

All QMS Shareholders who hold QMS Shares on the Scheme Record Date will be entitled to receive the Scheme Consideration

5.00pm on Friday, 14 February 2020

Implementation Date

All Scheme Shareholders will be delivered the Scheme Consideration to which they are entitled on this date

Friday, 21 February 2020

All dates following the date of the Scheme Meetings are indicative only and, among other things, are subject to all necessary approvals from the Court and any other regulatory authority and satisfaction or (if permitted) waiver of all Conditions Precedent. Any changes to the above timetable will be announced through the ASX and notified on QMS’ website at https://www.qmsmedia.com/.

All references to time are references to Melbourne, Australia time.

QMS Shareholders who have elected to receive communications electronically will receive an email which contains instructions about how to download a copy of this Scheme Booklet, and to lodge their proxy vote online. The Scheme Booklet will also be available for viewing and downloading on the QMS website at https://www.qmsmedia.com/.

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https://www.qmsmedia.com/

https://www.qmsmedia.com/


SECTION 1CHAIRMAN’S LETTER

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QMS MEDIA LIMITED | SCHEME BOOKLET 9SECTION 1 – CHAIRMAN’S LETTER

1. CHAIRMAN’S LETTER13 December 2019

Dear QMS Shareholder,On behalf of the QMS Board, I am pleased to deliver this Scheme Booklet, which contains important information for you to consider about the proposed acquisition of QMS by BidCo. BidCo is a special purpose company that was incorporated on 21 June 2019. It is an unlisted Australian proprietary company controlled by Quadrant Private Equity.

On 29 August 2019 Quadrant Private Equity submitted a confidential, indicative, incomplete, non-binding, offer to acquire 100% of the issued share capital of QMS to the QMS Board. The offer was for a cash price, but subject to rollover of not less than 15% and no more than 30% of QMS Shares in respect of all QMS Shareholders. This was rejected by the QMS Board, but led to further negotiations with Quadrant Private Equity.

Following these negotiations, on 29 October 2019 QMS announced to the ASX that it had entered into the Scheme Implementation Deed with BidCo under which it is proposed that BidCo will acquire 100% of the issued share capital of QMS for $1.22 per QMS Share. The acquisition is to be conducted by Scheme of Arrangement and is subject to several conditions, including shareholder, court and regulatory approvals, together with other customary conditions.

To confirm that final price (being higher than their previous cash offer) Quadrant Private Equity ultimately required QMS Group Chief Executive Officer and Executive Director Barclay Nettlefold and QMS Australia Chief Executive Officer John O’Neill (together the Rollover Principals) and entities controlled by the Rollover Principals to accept a proportion of the amount payable for the QMS Shares held by them in the form of ordinary and preference shares in the capital of HoldCo (HoldCo Shares). HoldCo is a special purpose company that was incorporated on 21 June 2019. It is an unlisted Australian proprietary company controlled by Quadrant Private Equity and is the ultimate holding company of BidCo.

On 29 October 2019, Barclay Nettlefold and John O’Neill and their respective entities which hold shares in QMS (Rollover Shareholders) each entered into an agreement (Voting and Rollover Agreements) under which it was agreed, among other things, that they would vote in favour of the Scheme and elect to receive HoldCo Shares under the Scheme for some of their QMS Shares (Scrip Consideration) and the remainder in cash. In Barclay Nettlefold’s case, the HoldCo Shares elected to be received are to the amount of $40 million in value (being $40 million which would otherwise be received as Cash Consideration) and in John O’Neill’s case, $3 million in value (being $3 million which would otherwise be received as Cash Consideration). The Voting and Rollover Agreements (which the Board was not involved in negotiating) are addressed in Sections 7.7 and 10.4.

If the Scheme is approved and implemented, QMS Shareholders on the Scheme Record Date will receive $1.22 per QMS Share that they hold (Cash Consideration), subject to the Rollover Shareholders receiving HoldCo shares as noted above.

The QMS Board currently intends to declare a fully franked Final Dividend of up to 1.3 cents per QMS Share in respect of the financial year ending 31 December 2019. The final decision on whether or not to declare the fully franked Final Dividend will be made by the QMS Board and announced early in 2020. If the fully franked Final Dividend is declared the QMS Board will determine and announce the Final Dividend Record Date and the Final Dividend Payment Date. The Final Dividend Record Date, in those circumstances, would likely be the earlier of the Scheme Record Date and a date in March which would reflect QMS’ usual calendar of payment of dividends.

Accordingly, while the payment of the Final Dividend itself, if declared, will not be conditional upon the Scheme becoming Effective, the timing of the payment may be accelerated to allow the payment before the implementation of Scheme. The payment of the Final Dividend, if declared, will not reduce the Scheme Consideration to be provided to Scheme Shareholders. The Scheme Consideration of $1.22 per QMS Share represents a:

� 36% premium to the closing price of QMS Shares on 23 October 2019, being the day prior to speculation in the press regarding a potential offer to acquire QMS (Undisturbed Share Price Date) of $0.895 per share;

� 38% premium to the 3-month VWAP of QMS Shares to the Undisturbed Share Price Date of $0.884 per share; and

� 46% premium to the 6-month VWAP of QMS Shares to the Undisturbed Share Price Date of $0.834 per share.2

[2] Based on calculation of VWAP inclusive of all volume traded for the day, consistent with the methodology adopted by the Independent Expert. The 3 and 6 month VWAP of QMS Shares are higher (and the applicable premium therefore lower) than the amounts set out in the ASX announcement relating to the Scheme on 29 October 2019 as the VWAP calculations in the announcement only included market volume during ASX trading hours rather than all volume traded for the day.

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QMS MEDIA LIMITED | SCHEME BOOKLET10 SECTION 1 – CHAIRMAN’S LETTER

The Scheme Consideration values QMS’ equity at approximately $420.6 million and QMS at an enterprise value (EV) of approximately $571.6 million, implying an EV/CY19 EBITDA multiple of 9.4x.

Independent ExpertThe QMS Board appointed Lonergan Edwards & Associates Limited (ABN 53 095 445 560) as the Independent Expert to assess the merits of the Scheme.

Based on the Cash Consideration, the Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of QMS Shareholders in the absence of a Superior Proposal.

The Independent Expert has assessed the fully diluted value of QMS Shares at between $1.12 and $1.29.

The Cash Consideration of $1.22 per QMS Share exceeds the midpoint of the Independent Expert’s assessed valuation range on a 100% controlling interest basis.

In addition, the Independent Expert is of the view that the market value of the HoldCo Shares to be issued to the Rollover Shareholders as Scrip Consideration is no greater than $1.22 per QMS Share (on an equivalent basis).

However, Rollover Shareholders should note that the Independent Expert has not made any assessment, based on the Scrip Consideration, of whether the Scheme is fair and reasonable and therefore in the best interests of Rollover Shareholders in the absence of a Superior Proposal.

A complete copy of the Independent Expert’s Report is included in Annexure A and I encourage you to read it in full.

QMS Directors’ recommendationThe QMS Board has been consistently focused on maximising value for QMS Shareholders through the execution of QMS’ strategy and assessing available strategic options. In recommending the Scheme to you, the Board has considered and evaluated a range of factors, including shareholder value, timing of execution and certainty of realisable value, given QMS’ near and medium term outlook.

The QMS Board unanimously recommends that you vote in favour of the Scheme, in the absence of a Superior Proposal, subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders. Furthermore, each QMS Director other than Barclay Nettlefold intends to vote all the QMS Shares held or controlled by them in favour of the Scheme, subject to those same qualifications. Under his Voting and Rollover Agreement, Barclay Nettlefold has unconditionally agreed to vote all the QMS Shares held or controlled by him in favour of the Scheme as long as that agreement remains operative.

In respect of the recommendations of Barclay Nettlefold and David Edmonds, QMS Shareholders should also have regard to the fact that, if the Scheme is implemented, Barclay Nettlefold and David Edmonds will receive the benefits detailed in Section 2.

In evaluating the options for QMS going forward in the context of the offer from BidCo, the QMS Board paid particular consideration to a number of key factors which are affecting QMS’ near and medium term outlook, including:

� general market conditions in the advertising sectors in which QMS operates which indicate a reduction in both the overall level of advertising expenditure and a reduction in expenditure on out-of-home (OOH) advertising;

� concern that in an environment of reduced advertising spend competitors may reduce pricing to maintain market share and occupancy levels with a consequent reduction in margins for the whole OOH advertising sector;

� current status of stocks on the ASX in the same sector as QMS, many of whom have reported declining earnings and have suffered consequent downward share price pressure;

� capital demands for the growth of QMS’ business, particularly to take full advantage of the QMS Sport platform and for QMS Australia to participate in significant upcoming tender process for concessions, and the fact that much of that capital demand would need to be sought through equity raisings which would dilute QMS Shareholders’ interests; and

� the offer from BidCo also exceeded the price per QMS Share of other unsolicited and non-binding offers which had been made to the QMS Board in recent times.

The QMS Board has also considered the following factors regarding the Scheme itself:

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QMS MEDIA LIMITED | SCHEME BOOKLET 11SECTION 1 – CHAIRMAN’S LETTER

� based on the Cash Consideration, the Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of QMS Shareholders in the absence of a Superior Proposal;

� the Scheme Consideration represents an EV of $571.6 million, implying an EV/CY19 EBITDA multiple of 9.4x. This represents an attractive valuation having reference to a challenging media market as reflected in the share price performance of media peers which have increased on average ~2.8% for the period from 2 January 2019 to 10 December 2019. In comparison the S&P/ASX200 Index has traded up 20.7% over the same period;

� the Scheme Consideration provides QMS Shareholders with certainty of value and the opportunity to realise their investment for cash, in full;

� the Scheme Consideration represents an attractive premium over QMS’ recent share price performance; and

� QMS Shareholders may, subject to the QMS Board’s final approval, be entitled to a Final Dividend of up to 1.3 cents per QMS Share which is independent of the Scheme and will not reduce the Scheme Consideration to be provided pursuant to the Scheme.

As a result, the QMS Board is of the view that the Scheme is compelling in the current circumstances and appropriate to be put to QMS Shareholders for their consideration.

The QMS Board does not make any recommendation in relation to whether the Rollover Shareholders should make an Election to receive Scrip Consideration.

Competing ProposalIf a Competing Proposal is received by QMS, the QMS Board will follow the procedures set out in Section 5.6 in considering and responding to the Competing Proposal.

General Scheme Meeting and Rollover Shareholders Scheme MeetingThe rights of the Rollover Shareholders under the Scheme differ from those of the other Shareholders in QMS (General Shareholders) because under the terms of the Scheme the Rollover Shareholders may elect to receive Scrip Consideration for a number of their QMS Shares but the General Shareholders may not. As noted above, the Rollover Shareholders have agreed to make an Election to receive Scrip Consideration for some of their QMS Shares under the Voting and Rollover Agreements.

The rights of the Rollover Shareholders under the Scheme are sufficiently different from those of the General Shareholders such that the Rollover Shareholders constitute a separate class of members for the purpose of voting on the Scheme.

As there are two separate classes of QMS Shareholder for the purposes of the Scheme, two different meetings will be held for QMS Shareholders to approve the Scheme, the General Scheme Meeting and the Rollover Shareholders Scheme Meeting.

The General Shareholders will vote at the General Scheme Meeting, but will not be permitted to vote at the Rollover Shareholders Scheme Meeting.

Equally, the Rollover Shareholders will vote at the Rollover Shareholders Scheme Meeting, but will not be permitted to vote at the General Scheme Meeting.

Details of the Scheme Meetings are set out in the Notice of General Scheme Meeting contained in Annexure D and in the Notice of Rollover Shareholders Scheme Meeting contained in Annexure E (together the Notices).

How to voteYour vote is important and we encourage you to vote in person, or by proxy, representative or attorney. For information on how to vote please refer to the Notice relevant to you. The General Scheme Meeting is to be held at 10.00am (Melbourne time) at The RACV Club, 501 Bourke St, Melbourne VIC 3000, on Thursday, 6 February 2020, and the Rollover Shareholders Scheme Meeting is to be held at immediately after the General Scheme Meeting at The RACV Club, 501 Bourke St, Melbourne VIC 3000, on Thursday, 6 February 2020.

If you wish the Scheme to proceed, it is important that you vote in favour of the applicable Scheme Resolution.

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For the Scheme to be approved by QMS Shareholders, votes in favour of the Scheme must be received from a majority in number (more than 50%) of QMS Shareholders present and voting (either in person or by proxy or representative) at each of the Scheme Meetings (unless the Court orders otherwise) and at least 75% of the total number of votes cast on the Scheme Resolution by QMS Shareholders (either in person or by proxy or representative) must be in favour of the Scheme.

Details of how to vote at the Scheme Meetings are set out in the Notices.

Further informationThe Scheme Booklet sets out important information relating to the Scheme and the reasons why the QMS Directors have made their recommendations, together with the Independent Expert’s Report. The Scheme Booklet also sets out some of the reasons why you may wish to vote against the Scheme.

Please read this document carefully and in its entirety. It will assist you in making an informed decision on how to vote. We also recommend that you seek independent financial, legal and taxation advice before making any decision in relation to your QMS Shares.

If you have any questions in relation to this Scheme Booklet or the Scheme you should contact the QMS Shareholder Information Line on 1300 069 339 (within Australia) or +61 3 9415 4275 (outside of Australia) between 8.30am and 5.00pm (Melbourne time) on Business Days.

On behalf of the QMS Board, I would like to take this opportunity to thank you for your ongoing support of QMS and I look forward to your participation at the Scheme Meetings.

Yours sincerely,

Wayne StevensonChairmanQMS Media Limited

SECTION 1 – CHAIRMAN’S LETTER

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SECTION 2IMPORTANT INFORMATION REGARDING DIRECTOR’S RECOMMENDATIONS

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2. IMPORTANT INFORMATION REGARDING DIRECTORS’ RECOMMENDATIONS 2.1 Barclay NettlefoldQMS Shareholders should have regard to the fact that, if the Scheme is implemented, Barclay Nettlefold will receive the following additional benefits:

� 592,463 QMS Performance Rights held by him will vest and as a result he will receive an additional 592,463 QMS Shares for which he will be entitled to receive Cash Consideration of $722,804. The remaining 334,635 of Barclay Nettlefold’s QMS Performance Rights, along with 327,315 QMS Performance Rights which were offered to him subject to QMS Shareholder Approval will be cancelled if the Scheme becomes Effective;

� he will remain as a director of QMS; and

� his controlled Rollover Shareholders will, pursuant to the Election to be made in accordance with the Nettlefold Voting and Rollover Agreement, receive Scrip Consideration instead of Cash Consideration for 32,786,885 of the 46,238,471 QMS Shares held by them (equating to $40 million in value), allowing him to participate in the future value of QMS.

QMS Shareholders should note that the vesting of 592,463 of Barclay Nettlefold’s outstanding QMS Performance Rights as noted above, and the corresponding issue of 592,463 QMS Shares to him, has no impact on the Scheme Consideration payable to Scheme Shareholders. The 592,463 QMS Shares will be issued after the Scheme Meetings and will not be voted at either Scheme Meeting.

The 592,463 QMS Shares will form part of the Scheme Shares and Barclay Nettlefold will be entitled to receive the Scheme Consideration under the Scheme for them, provided that they are held by him as at the Scheme Record Date. Barclay Nettlefold will be entitled to receive the Final Dividend (if declared) for them, provided that they are held by him as at the Final Dividend Record Date.

The QMS Board (with Barclay Nettlefold and David Edmonds abstaining) has determined that Barclay Nettlefold can, and should, if he wishes to do so, make a recommendation on the Scheme notwithstanding the nature of the additional benefits described above which will be received by him if the Scheme is implemented.

Barclay Nettlefold considers that it is appropriate for him, notwithstanding the nature of the additional benefits described above which he will receive, to make a recommendation on the Scheme in light of the importance of the Scheme and his role as Group CEO and in assisting with the facilitation of the proposed Scheme.

2.2 David EdmondsQMS Shareholders should have regard to the fact that, if the Scheme is implemented, David Edmonds will receive an additional benefit in the form of the vesting of 287,569 of QMS Performance Rights held by him and as a result he will receive an additional 287,569 of QMS Shares for which he will be entitled to receive Cash Consideration of $350,834. The remaining 320,328 of David Edmonds’ QMS Performance Rights along with 154,306 QMS Performance Rights which were offered to him subject to QMS Shareholder Approval will be cancelled if the Scheme becomes Effective.

QMS Shareholders should note that the accelerated vesting of 287,569 of David Edmonds’ outstanding QMS Performance Rights as noted above, and corresponding issue of 287,569 QMS Shares to him, has no impact on the Scheme Consideration payable to Scheme Shareholders. The 287,569 QMS Shares will be issued after the Scheme Meetings and will not be voted at either Scheme Meeting.

The 287,569 QMS Shares will form part of the Scheme Shares and David Edmonds will be entitled to receive the Scheme Consideration under the Scheme for them, provided that they are held by him as at the Scheme Record Date. David Edmonds will be entitled to receive the Final Dividend (if declared) for them, provided that they are held by him as at the Final Dividend Record Date.

The QMS Board (with Barclay Nettlefold and David Edmonds abstaining) has determined that David Edmonds can, and should, if he wishes to do so, make a recommendation on the Scheme notwithstanding the nature of the additional benefit described above which will be received by him if the Scheme is implemented.

David Edmonds considers that it is appropriate for him, notwithstanding the nature of the additional benefit described above which he will receive, to make a recommendation on the Scheme in light of the importance of the Scheme and his role as Executive Director of QMS and in assisting with the facilitation of the proposed Scheme.

Details of the QMS Performance Rights and their treatment if the Scheme becomes effective can be found in Section 10.8.

SECTION 2 – IMPORTANT INFORMATION REGARDING DIRECTORS’ RECOMMENDATIONS

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SECTION 3KEY CONSIDERATIONS RELEVANT TO YOUR VOTE

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3. KEY CONSIDERATIONS RELEVANT TO YOUR VOTE3.1 Summary of reasons why you might vote for or against the Scheme ResolutionThe Scheme has a number of advantages and disadvantages which may affect Scheme Shareholders3 in different ways depending on their individual circumstances. QMS Shareholders should seek professional advice on their particular circumstances, as appropriate, before voting on the Scheme.

Section 3.2 provides a summary of some of the reasons why the QMS Board unanimously recommends QMS Shareholders vote in favour of the Scheme, including:

your Directors unanimously recommend that you vote in favour of the Scheme Resolution in the absence of a Superior Proposal,4 subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders;

your Directors are of the view that the Scheme is compelling in the current circumstances taking into account factors affecting QMS’ near and medium term outlook;

based on the Cash Consideration, the Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of QMS Shareholders in the absence of a Superior Proposal;

Cash Consideration delivers certainty and immediate value for your QMS Shares;

the Scheme Consideration represents an attractive premium to the undisturbed closing price of QMS Shares on the Undisturbed Share Price Date;

since the announcement of the Scheme, no Superior Proposal has emerged;

in the absence of a Superior Proposal, QMS’ share price may fall in the near-term if the Scheme is not implemented;

if the Scheme does not proceed, you will continue to be exposed to risks associated with QMS’ business, rather than realising certain value for your QMS Shares in a certain timeframe; and

no brokerage or stamp duty will be payable by you for the transfer of your QMS Shares under the Scheme

Section 3.2 should be read in conjunction with Section 3.3, which sets out some of the reasons why QMS Shareholders may wish to vote against the Scheme, including:

you may disagree with your Directors’ unanimous recommendation and the Independent Expert’s conclusion and consider that the Scheme is not in your best interests;

you may prefer to realise the future potential value of QMS, and may consider that the Scheme does not sufficiently capture QMS’ future potential;

you may believe that it is in your interests to maintain your current investment and risk profile by retaining your investment in QMS;

the tax consequences of transferring your QMS Shares under the Scheme may not be advantageous to you; and

you may consider that there is potential for a Superior Proposal to be made in the foreseeable future.

[3] Scheme Shareholders are QMS Shareholders who recorded in the QMS Share Register as at the Scheme Record Date.[4] In respect of the recommendations of Barclay Nettlefold and David Edmonds, QMS Shareholders should have regard to the fact that, if the Scheme is implemented, Barclay Nettlefold and David Edmonds will receive benefits as further detailed in Section 2.

SECTION 3 – KEY CONSIDERATIONS RELEVANT TO YOUR VOTE

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QMS MEDIA LIMITED | SCHEME BOOKLET 17SECTION 3 – KEY CONSIDERATIONS RELEVANT TO YOUR VOTE

You should read this Scheme Booklet in full, including the Independent Expert’s Report, before deciding how to vote in relation to the Scheme.

While the QMS Directors acknowledge the reasons to vote against the Scheme, they believe the advantages of the Scheme significantly outweigh the disadvantages.

3.2 Why your Directors recommend that you should vote in favour of the Scheme3.2.1 Your Directors unanimously recommend that you vote in favour of the Scheme Resolution in the absence of a Superior Proposal, subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS ShareholdersThe QMS Directors have assessed the merits of the Scheme and unanimously recommend that you vote in favour of the Scheme, in the absence of a Superior Proposal, subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders.5

In reaching their recommendation, the QMS Board has considered the advantages and disadvantages of the Scheme, including the information contained in:

a. Section 3.2 (Why you should vote in favour of the Scheme);

b. Section 3.3 (Why you may wish to vote against the Scheme);

c. Section 8 (Risks) and Section 9 (Taxation Implications); and

d. Annexure A (Independent Expert’s Report).

In the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders, each of the QMS Directors other than Barclay Nettlefold intends to vote all QMS Shares that he or she holds or controls in favour of the Scheme. Under his Voting and Rollover Agreement, Barclay Nettlefold has unconditionally agreed to vote all the QMS Shares held or controlled by him in favour of the Scheme as long as that agreement remains operative.

Further details of the interests of the QMS Directors are contained in Section 10.1.

3.2.2 Your Directors are of the view that the Scheme is compelling in the current circumstances taking into account factors affecting QMS’ near and medium term outlookIn evaluating the options for QMS going forward in the context of the offer from BidCo, the QMS Board paid particular consideration to a number of key factors which are affecting QMS’ near and medium term outlook, including:

a. general market conditions in the advertising sectors in which QMS operates which indicate a reduction in both the overall level of advertising expenditure and a reduction in expenditure on out of home advertising;

b. concern that in an environment of reduced advertising spend competitors may reduce pricing to maintain market share and occupancy levels with a consequent reduction in margins for the whole OOH advertising sector;

c. current status of stocks on the ASX in the same sector as QMS, many of whom have reported declining earnings and have suffered consequent downward share price pressure;

d. capital demands for the growth of QMS’ business, particularly to take full advantage of the QMS Sport platform and for QMS Australia to participate in significant upcoming tender process for concessions, and the fact that much of that capital demand would need to be sought through equity raisings which would dilute QMS Shareholders’ interests; and

e. the offer from BidCo also exceeded other unsolicited and non-binding offers which had been made to the Board in recent times.

As a result, the QMS Board is of the view that the Scheme is compelling in the current circumstances and appropriate to be put to QMS Shareholders for their consideration.

[5] In respect of the recommendations of Barclay Nettlefold and David Edmonds, QMS Shareholders should have regard to the fact that, if the Scheme is implemented, Barclay Nettlefold and David Edmonds will receive benefits as further detailed in Section 2.

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QMS MEDIA LIMITED | SCHEME BOOKLET18 SECTION 3 – KEY CONSIDERATIONS RELEVANT TO YOUR VOTE

3.2.3 Based on the Cash Consideration, the Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of QMS Shareholders in the absence of a Superior ProposalLonergan Edwards & Associates Limited (ABN 53 095 445 560) has been appointed as the Independent Expert to assess the merits of the Scheme and to provide an opinion as to whether the Scheme is in the best interests of QMS Shareholders.

Based on the Cash Consideration, the Independent Expert has concluded that the Scheme is fair and reasonable and therefore in the best interests of QMS Shareholders in the absence of a Superior Proposal.


The Cash Consideration of $1.22 per QMS Share exceeds the midpoint of the Independent Expert’s assessed valuation range on a 100% controlling interest basis.

In addition, the Independent Expert is of the view that the market value of the HoldCo Shares to be issued to the Rollover Shareholders as Scrip Consideration is no greater than $1.22 per QMS Share (on an equivalent basis).

However, Rollover Shareholders should note that the Independent Expert has not made any assessment, based on the Scrip Consideration, of whether the Scheme is fair and reasonable and therefore in the best interests of Rollover Shareholders in the absence of a Superior Proposal.

A complete copy of the Independent Expert’s Report is included in Annexure A. The QMS Directors encourage you to read the Independent Expert’s Report in its entirety before making a decision as to whether or not to vote in favour of the Scheme.

3.2.4 Cash Consideration delivers certainty and immediate value for your QMS SharesThe offer from BidCo is an all-cash offer.6 This offers a high degree of certainty of value and timing.

If the Scheme is implemented, QMS Shareholders who are not eligible to make, or have not made an Election to receive Scrip Consideration, will receive the Scheme Consideration in cash for each QMS Share that they own at the Scheme Record Date, to be paid on the Implementation Date.

In contrast, if the Scheme does not proceed, the amount which QMS Shareholders will be able to realise for their investment in QMS Shares will be uncertain. The Scheme removes this uncertainty for QMS Shareholders. For details of the risks relating to remaining a QMS Shareholder, see Section 8.

3.2.5 The Cash Consideration represents an attractive premium to the undisturbed closing price of QMS Shares on the Undisturbed Share Price Date The Cash Consideration of $1.22 per QMS Share represents a:

� 36% premium to the undisturbed closing price of QMS Share on the Undisturbed Share Price Date of $0.895 per share;

� 38% premium to the 3-month VWAP of QMS Shares to the Undisturbed Share Price Date of $0.884 per share; and

� 46% premium to the 6-month VWAP of QMS Shares to the Undisturbed Share Price Date of $0.834 per share.7

[6] This assumes that you are not a Rollover Shareholder entitled to make an Election to receive some or all of your Scheme Consideration as Scrip Consideration.[7] Based on calculation of VWAP inclusive of all volume traded for the day, consistent with the methodology adopted by the Independent Expert. The 3 and 6 month VWAP of QMS Shares are higher (and the applicable premium therefore lower) than the amounts set out in the ASX announcement relating to the Scheme on 29 October 2019 as the VWAP calculations in the announcement only included market volume during ASX trading hours rather than all volume traded for the day.

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Chart 1.1: Price of QMS Shares for the six months ended 10 December 2019

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

QMS S&P/ASX200

QM

S M

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rice

36.3% premium to the undisturbed

closing price

Scheme Consideration $1.22

$1.235 Scheme Announced (29-Oct-19)

$0.895 Undisturbed closing price pre press speculation (23-Oct-19)

Source: S&P Capital IQ, as at 10 December 2019 close

Note: The S&P/ASX 200 Index has been rebased to the closing price of QMS Media on 11 June 2019, being $0.765 per share

3.2.6 Since the announcement of the Scheme, no Superior Proposal has emergedSince the Scheme Announcement Date, no Superior Proposal has emerged and the QMS Directors are not aware of any Superior Proposal that is likely to emerge.

If a Competing Proposal (which may be a Superior Proposal) is received by QMS, the QMS Board will follow the procedures set out in Section 5.6 in considering and responding to the Competing Proposal.

3.2.7 In the absence of a Superior Proposal, QMS’ share price may fall in the near-term if the Scheme is not implemented Prior to the Scheme Announcement Date, the undisturbed closing price of QMS Shares was $0.895 per share on the Undisturbed Closing Price Date. Since then, it has increased by 33.5% to $1.195 per QMS Share on 10 December 2019 (being the last practicable trading day prior to the date of this Scheme Booklet).

In the absence of a Superior Proposal, if the Scheme is not implemented, the QMS Directors believe that the price of the QMS Shares may fall in the near term.

3.2.8 If the Scheme does not proceed, you will continue to be exposed to risks associated with QMS’ business, rather than realising certain value for your QMS Shares in a certain timeframeIf the Scheme does not proceed, the value that you will be able to realise from your QMS Shares (in terms of the price of those QMS Shares and any future dividends paid in respect of them) will necessarily be uncertain and subject to a number of risks outlined in Section 8.

In addition to the general investment risks outlined in Section 8.2 faced by investors in an ASX listed company, you will also be exposed to the range of business-specific risks associated with your current investment in QMS Shares outlined in Section 8.3.

The Scheme removes these risks for you and allows you to exit your investment in QMS at a price that the QMS Directors consider compelling. If the Scheme is approved and implemented, these risks and uncertainties will be assumed by BidCo, as the sole shareholder of QMS following implementation of the Scheme.

3.2.9 No brokerage or stamp duty will be payable by you for the transfer of your QMS Shares under the SchemeYou will not incur any brokerage or stamp duty on the transfer of your QMS Shares to BidCo under the Scheme. It is possible that such charges may be incurred if you transfer your QMS Shares other than under the Scheme.

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QMS MEDIA LIMITED | SCHEME BOOKLET20 SECTION 3 – KEY CONSIDERATIONS RELEVANT TO YOUR VOTE

3.3 Why you may wish to vote against the SchemeAlthough the Scheme is recommended unanimously by your Directors8 in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders and the Independent Expert has concluded that the Scheme is in the best interests of QMS Shareholders in the absence of a Superior Proposal, factors which may lead you to consider voting against the Scheme include the following:

3.3.1 You may disagree with your Directors’ unanimous recommendation and the Independent Expert’s conclusion and consider that the Scheme is not in your best interestsIn concluding that the Scheme is in the best interests of the QMS Shareholders, absent a Superior Proposal, your Directors and the Independent Expert are making judgments based on future trading conditions and events which cannot be predicted with any certainty and which may prove to be inaccurate (positively or negatively). You may hold a different view from, and are not obliged to follow the recommendation of, your Directors, and you may not agree with the Independent Expert’s conclusion.

3.3.2 You may prefer to participate in the future value of QMS by retaining your QMS Shares, and may consider that the Scheme does not sufficiently capture QMS’ future potentialIf the Scheme is approved and implemented, you will cease to be a QMS Shareholder. As such, you will no longer be able to participate in the financial performance of QMS in the future, or the future prospects of QMS’ ongoing business, including any benefits that may result from being a QMS Shareholder. However, there is no guarantee as to QMS’ future performance, as with all investments in listed securities.

3.3.3 You may believe that it is in your interests to maintain your current investment and risk profile by retaining your investment in QMSYou may wish to retain your investment in QMS in order to have an investment in a publicly listed company with the specific characteristics of QMS in terms of industry, operations, profile, size, capital structure and potential dividend stream.

Implementation of the Scheme may result in a disadvantage to those QMS Shareholders who wish to maintain their investment profile as they may find it difficult to find an investment with a similar profile to that of QMS. Transaction costs may also be incurred undertaking any new investment.

3.3.4 The tax consequences of transferring your QMS Shares under the Scheme may not be advantageous to youImplementation of the Scheme may trigger taxation consequences for QMS Shareholders, such as the realization of a capital gain or a capital loss. You may not wish to trigger that tax impact, either now or in the future.

A general guide to the taxation implications of the Scheme is set out in Section 9. This guide is expressed in general terms only and QMS Shareholders should seek professional taxation advice regarding the tax consequences applicable to their own circumstances.

3.3.5 You may consider that there is potential for a Superior Proposal to be made in the foreseeable futureIf QMS were to continue as an independent ASX listed entity, it is possible that a corporate control proposal for QMS could materialise in the future, such as a takeover bid with a higher price.

Implementation of the Scheme will mean that QMS Shareholders will not receive the benefit of any such proposal.

Since the Scheme Announcement Date, no Superior Proposal has emerged and the QMS Directors are not aware of any Superior Proposal that is likely to emerge.

The Scheme Implementation Deed prohibits QMS from soliciting a Competing Proposal. However, QMS is permitted to respond to any Competing Proposal should the QMS Directors determine that failing to do so would likely constitute a breach of their fiduciary or statutory duties. Further details of the key terms of the Scheme Implementation Deed (including a summary of QMS’ obligations in relation to responding to a Competing Proposal) are provided in Section 5.5.

If a Competing Proposal (which may be a Superior Proposal) is received by QMS, the QMS Board will follow the procedures set out in Section 5.6 in considering and responding to the Competing Proposal.


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3.4 Other considerations relevant to your vote on the SchemeYou should also take into account the following additional considerations in deciding whether to vote in favour of, or against, the Scheme.

3.4.1 The Scheme may proceed and apply to you even if you vote against itIf the Scheme Resolution is passed by the Requisite Majorities and is approved by the Court and the other Conditions Precedent are satisfied or (if permitted) waived, the Scheme will be implemented irrespective of whether you do not vote or you vote against the Scheme Resolution at the applicable Scheme Meetings.

If this occurs, any QMS Shares you hold on the Scheme Record Date will be transferred to BidCo and you will receive the Scheme Consideration.

3.4.2 If the Scheme does not proceed, QMS Shareholders will not receive the Scheme ConsiderationIf the Scheme is not approved or all outstanding Conditions Precedent are not satisfied or (if permitted) waived, the Scheme will not proceed. In that case, QMS Shareholders will retain their QMS Shares and not receive the Scheme Consideration. QMS will then continue to operate as it does currently and QMS Shares will remain listed on the ASX.

If the Scheme is not implemented, the advantages of the Scheme described in Section 3.2 will not be realised.

3.4.3 Exclusivity and the effect on likelihood of Competing ProposalThe Scheme Implementation Deed provides that QMS is subject to certain exclusivity obligations and restrictions, including no shop, no talk and no due diligence restrictions, and notification obligations. It also provides that BidCo has a matching right in respect of Competing Proposals.

QMS must not, directly or indirectly, solicit or encourage any Competing Proposal or any enquiries or discussions in relation to, or which may reasonably be expected to lead to, a Competing Proposal.

However, if the QMS Board determines that complying with no talk and no due diligence restrictions would be likely to constitute a breach of the fiduciary or statutory duties owed by the QMS Board, it need not do so, and in those circumstances QMS would be permitted to respond to any Competing Proposal.

A Competing Proposal may also arise without the assistance or engagement of the QMS Board.

Refer to Section 5.5.3 for further information on these arrangements.

The Independent Expert is of the view the exclusivity provisions in the Scheme Implementation Deed, along with the Break Fee (Refer to Section 3.4.4 below) and Quadrant’s Relevant Interest in the QMS Shares held by the Rollover Shareholders (Refer to Section 7.9.1 below) diminish the likelihood of a Competing Proposal emerging.

3.4.4 Break Fee

If the Scheme does not become Effective, QMS may be required to pay the Break Fee ($4.2 million) to BidCo.

The failure to pass either Scheme Resolution by the Requisite Majority will not trigger the payment of the Break Fee by QMS.

Refer to Section 5.5.5 for a summary of when the Break Fee may become payable.

3.4.5 Warranties by Scheme Shareholders

If the Scheme becomes Effective, each Scheme Shareholder will be deemed to have given certain warranties to BidCo, including that:

a. all their Scheme Shares (including any rights and entitlements attaching to those Scheme Shares) will, at the time of transfer of them to BidCo in accordance with the Scheme, be fully paid and free from various encumbrances and interests of third parties; and

b. they have full power and capacity to transfer their Scheme Shares (including any rights and entitlements attaching to those Scheme Shares) to BidCo under the Scheme.

See Section 5.4.8 for more details.

3.4.6 Recommendation in relation to the Scrip ConsiderationThe QMS Directors do not make any recommendation in relation to whether the Rollover Shareholders should make an Election to receive Scrip Consideration.

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SECTION 4FREQUENTLY ASKED QUESTIONS

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QMS MEDIA LIMITED | SCHEME BOOKLET 23SECTION 4 – FREQUENTLY ASKED QUESTIONS

4. FREQUENTLY ASKED QUESTIONS Question Answer Reference

THE SCHEME AT A GLANCE

Why have I received this Scheme Booklet?

This Scheme Booklet has been sent to you because you were registered as a QMS Shareholder on Friday, 13 December 2019 and QMS Shareholders are being asked to vote on the Scheme, which, if approved, will result in BidCo acquiring all the QMS Shares.

This Scheme Booklet is intended to help you to decide how to vote on the relevant Scheme Resolution which needs to be passed at the Scheme Meetings to allow the Scheme to proceed.

If you have transferred all of your QMS Shares, please disregard this Scheme Booklet as you will not be entitled to vote at the Scheme Meetings.

See Cover Page and Important Notices.

What is the Scheme?

The Scheme is a scheme of arrangement, which is a statutory procedure under the Corporations Act that is commonly used to enable one company to acquire another company.

The Scheme is between QMS and the Scheme Shareholders and will effect the acquisition of QMS by BidCo.

If the Scheme is approved and implemented, the Scheme Shareholders will receive the Scheme Consideration for each Scheme Share held on the Scheme Record Date and QMS will become a wholly-owned subsidiary of BidCo.

A copy of the Scheme is contained in Annexure B.

See Section 5 and Annexure B.

How do the QMS Directors recommend that QMS Shareholders vote and how do the QMS Directors intend to vote?

Your Directors unanimously recommend that QMS Shareholders vote in favour of the Scheme, in the absence of a Superior Proposal, subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders.9

A summary of their reasons for doing so is set out in Section 3.2.

Each QMS Director intends to vote all QMS Shares held or controlled by them in favour of the Scheme subject to the same qualifications. Under his Voting and Rollover Agreement, Barclay Nettlefold has unconditionally agreed to vote all the QMS Shares held or controlled by him in favour of the Scheme as long as that agreement remains operative.

Your Directors have also provided a summary of reasons why you may wish to vote against the Scheme in Section 3.3.

See Sections 2, 3.2, 3.3 and 10.1.

Do the QMS Directors make any recommendation in respect of the Scrip Consideration?

The QMS Directors do not make any recommendation in relation to whether the Rollover Shareholders should make an Election to receive Scrip Consideration.

See Section 3.4.6.


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QMS MEDIA LIMITED | SCHEME BOOKLET24 SECTION 4 – FREQUENTLY ASKED QUESTIONS

Question Answer ReferenceWhat is the opinion of the Independent Expert?

The Independent Expert has concluded that the Scheme is fair and reasonable and, therefore, is in the best interests of QMS Shareholders, in the absence of a Superior Proposal.


You should read the Independent Expert’s Report in Annexure A in full before making a decision on how to vote on the Scheme.

See Annexure A.

Is the QMS Board aware of a Superior Proposal?

No.

As at the date of this Scheme Booklet, no Superior Proposal has emerged and the QMS Board is not aware of any Superior Proposal that may emerge.

See Sections 3.2.6 and 3.3.5.

What happens if a Competing Proposal emerges?

Until the Scheme is approved by the Court, other parties may make unsolicited acquisition proposals for QMS.

If, during the Exclusivity Period, QMS is approached in relation to an actual or potential Competing Proposal it must notify BidCo of the approach.

If the Competing Proposal is a Superior Proposal, BidCo will be given at least three Business Days to provide a counterproposal (Updated Bidder Proposal).

If BidCo makes an Updated Bidder Proposal, then BidCo and QMS must use their best endeavours to agree to give effect to the Updated Bidder Proposal.

These (and other) provisions of the Scheme Implementation Deed are summarised in greater detail in Section 5.5.

If a Competing Proposal for QMS emerges prior to the Second Court Hearing, the QMS Directors (other than Barclay Nettlefold) will carefully consider the proposal and determine whether it is a Superior Proposal. An exception to the exclusivity arrangements in the Scheme Implementation Deed allows them to do so.

QMS will keep you informed of any material developments, including by making announcements via the ASX.

See Sections 5.5 and 5.6.

Who are BidCo, HoldCo and Quadrant Private Equity?

BidCo and HoldCo, are the companies that are offering the Scheme Consideration for your QMS Shares. BidCo and HoldCo are proprietary companies incorporated in Australia under the Corporations Act. Each of BidCo and HoldCo are ultimately controlled by Quadrant Private Equity.

Quadrant Private Equity is one of Australia’s largest independent private equity firms, managing and advising more than $4.6 billion in private equity capital. Quadrant Private Equity invests in management buyouts, management buy-ins and growth capital opportunities in Australia and New Zealand.

See Sections 7.2 and 7.3.

How is BidCo funding the Scheme Consideration?

BidCo intends to fund the Scheme Consideration through the Equity Funding and the Debt Funding.

See Section 7.5.

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QMS MEDIA LIMITED | SCHEME BOOKLET 25SECTION 4 – FREQUENTLY ASKED QUESTIONS

Question Answer ReferenceCONDITIONS

Are there any conditions to be satisfied?

There are certain conditions that will need to be satisfied or waived (where capable of waiver) before the Scheme can become Effective.In summary, as at the date of this Scheme Booklet, the outstanding conditions include:

� NZ OIO approval;

� no legal or regulatory restraints on or orders preventing the implementation of the Scheme;

� the Scheme being approved at each Scheme Meeting by the relevant QMS Shareholders;

� the Independent Expert does not publicly withdraw, qualify or change its opinion that the Scheme is in the best interests of the QMS Shareholders at any time prior to the Specified Time;

� Court approval coming into effect before the End Date;

� no QMS Prescribed Occurrence occurring between the date of the Scheme Implementation Deed and the Specified Time;

� no QMS Regulated Event occurring between the date of the Scheme Implementation Deed and the Specified Time;

� no QMS Material Adverse Change occurring between the date of the Scheme Implementation Deed and the Specified Time;

� the BidCo Warranties being true as at the Specified Time;

� QMS Warranties being true as at the Specified Time;

� counterparties to the COC Contracts providing the COC Consents before the Specified Time;

� Scheme Implementation Deed and Deed Poll remaining in force as at the Delivery Time; and

� other Court conditions in relation to the Scheme as are acceptable to QMS and BidCo are satisfied.

As at the date of this Scheme Booklet, the Directors are not aware of any reason why these conditions should not be satisfied or waived (where capable of waiver).


ROLLOVER SHAREHOLDERS

Who are the Rollover Shareholders and what is the Election?

The Rollover Shareholders are entities controlled by QMS Media Group CEO Barclay Nettlefold and QMS Media Australia CEO John O’Neill.

The Rollover Shareholders are entitled to elect to receive some or all of their Scheme Consideration as Scrip Consideration rather than Cash Consideration and have agreed to do so for an amount equal to $43 million in value under the Voting and Rollover Agreements.

See Section 5.4.2.

What is Scrip Consideration?

Scrip Consideration is, in Barclay Nettlefold and his controlled entities’ case, such number of HoldCo Shares equal to $40 million in value (being $40 million which would otherwise be received as Cash Consideration) and in John O’Neill his controlled entities’ case such number of HoldCo Shares equal to $3 million in value (being $3 million which would otherwise be received as Cash Consideration).

See Sections 5.2, 7.5.2, 7.7 and the definitions of “HoldCo Shares” and “Scrip Consideration” in Section 11.1.

Why do the Rollover Shareholders vote separately from the General Shareholders?

Because the Rollover Shareholders may elect to receive a different form of consideration under the Scheme to the General Shareholders, their rights under the Scheme sufficiently differ from those of General Shareholders, such that they constitute a separate class of members for the purpose of voting on the Scheme.

This means that the Rollover Shareholders will not be permitted to vote at the General Scheme Meeting and will instead vote at the Rollover Shareholders Scheme Meeting.

See Section 5.4.2.

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Question Answer Reference

If I am a Rollover Shareholder, how do I make an Election?

If you are a Rollover Shareholder, you need to complete an Election Form in accordance with the instructions set out in the form, and return it to the Share Registry by no later than the Election Time (which is 5.00pm (Melbourne time) on Monday, 3 February 2020).

If you are not a Rollover Shareholder, you are not eligible to make an Election or to receive the Scrip Consideration.

See Key Dates, definition of “Election Form” in Section 11.1 and clause 5.2 of the Scheme in Annexure B.

What happens if a Rollover Shareholder does not make a valid Election?

If you are a Rollover Shareholder and your Election is not received before the Election Time (which is 5.00pm (Melbourne time) on Monday, 3 February 2020) or you have not made a valid Election, you will receive the Cash Consideration for all of your Scheme Shares.

See Key Dates, Section 5 and clause 5.3 of the Scheme in Annexure B.

QMS PERFORMANCE RIGHTS

Will QMS Performance Rights holders participate in the Scheme?

There are 8,055,254 QMS Performance Rights issued by the QMS Board and outstanding. A further 481,621 QMS Performance Rights have been offered but are yet to be issued as they are subject to QMS Shareholder approval.

The QMS Board (in the absences of Barclay Nettlefold and David Edmonds) has exercised its discretion and has determined to vest 5,235,835 of the QMS Performance Rights issued and outstanding, and cancel the remainder, (including those subject to QMS Shareholder Approval) on the Scheme Record Date, subject to the Scheme becoming Effective.

The vesting of the QMS Performance Rights as a result of the exercise of the QMS Board’s discretion, and corresponding issue of 5,235,835 QMS Shares to their holders, has no impact on the Scheme Consideration payable to Scheme Shareholders.

The 5,235,835 QMS Shares to be issued to QMS Performance Rights holders will be issued after the Scheme Meetings and will not be voted at either Scheme Meeting.


TRANSFER OF QMS SHARES BEFORE THE SCHEME RECORD DATE

Can I transfer my QMS Shares now?

You can transfer your QMS Shares on market at any time before close of trading on ASX on the Effective Date. The price you obtain on ASX may vary from the Scheme Consideration.

QMS intends to apply to ASX for QMS Shares to be suspended from official quotation on ASX from close of trading on the Effective Date (which is currently expected to be Tuesday, 11 February 2020). You will not be able to transfer your QMS Shares on market after this time.

You can transfer your QMS Shares off-market at any time on or before the Scheme Record Date, provided that the registrable transfer or transmission application is received at the Share Registry on or before the Scheme Record Date.

For the purposes of determining entitlements under the Scheme, QMS will not accept for registration or recognise any transfer or transmission applications in respect of QMS Shares received after the Scheme Record Date, or received prior to the Scheme Record Date but not in a registrable or actionable form.

If you transfer your QMS Shares before the relevant Scheme Meeting, you will not be entitled to vote at that Scheme Meeting.

If you transfer your QMS Shares before the Scheme Record Date, you will not receive the Scheme Consideration.

See Section 5.4.5.

SECTION 4 – FREQUENTLY ASKED QUESTIONS

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Question Answer ReferenceMEETINGS AND VOTING

Why are there two meetings in relation to the Scheme?

There are two meetings in relation to the Scheme because the Rollover Shareholders are offered and may elect to receive a different form of consideration to the General Shareholders. Therefore their rights under the Scheme sufficiently differ from those of the General Shareholders such that they constitute a separate class of members for the purposes of voting on the Scheme.

This means that the Rollover Shareholders will not be permitted to vote at the General Scheme Meeting and will instead vote at the Rollover Shareholders Scheme Meeting.

Equally the General Shareholders will not be permitted to vote at the Rollover Shareholders Scheme Meeting.

See Section 5.4.2.

What am I being asked to vote on?

You are being asked to vote on whether or not to approve the Scheme by voting on the relevant Scheme Resolution.

The text of the General Scheme Resolution (which the General Shareholders are asked to vote on) is set out in the Notice of General Scheme Meeting in Annexure D.

The text of the Rollover Shareholders Scheme Resolution (which the Rollover Shareholders are asked to vote on) is set out in the Notice of Rollover Shareholders Scheme Meeting in Annexure E.

See Annexure D and Annexure E.

What vote is required to approve the Scheme?

For the Scheme to proceed, at each of the Scheme Meetings, each Scheme Resolution must be passed by:

� a majority in number (more than 50%) of QMS Shareholders who vote on the respective Scheme Resolution (either in person or by proxy or representative); and

� at least 75% of the votes cast by QMS Shareholders on the respective Scheme Resolution (either in person or by proxy or representative).

The Court has the discretion to waive the first of these two requirements if it considers it appropriate to do so.

See Section 5.4.1 and Annexure D and Annexure E.

Am I entitled to vote?

Each QMS Shareholder who is registered on the QMS Share Register at 5.00pm on Tuesday, 4 February 2020 is entitled to vote at:

� the General Scheme Meeting, if you are a General Shareholder; and

� the Rollover Shareholders Scheme Meeting, if you are a Rollover Shareholder.

See the definitions of “General Scheme Meeting”, “General Shareholder”, “Rollover Shareholders Scheme Meeting” and “Rollover Shareholder” in Section 11.1, Annexure D and Annexure E.

Is voting compulsory?

Voting is not compulsory. However, the Scheme will only be successful if it is approved by the Requisite Majorities of QMS Shareholders, so voting is important and QMS Directors encourage you to vote.

See Section 5.4.1, Annexure D and Annexure E.

Will I be bound by the Scheme if I do not vote?

If the Scheme Resolutions are approved, the Conditions Precedent are satisfied or (if permitted, waived) and the Court approves the Scheme, you will be bound by the Scheme whether or not you voted and whether or not you voted in favour of it.

If the Scheme Resolutions are not approved, you will not be bound by the Scheme whether or not you voted and whether or not you voted in favour of it.

See Section 5.1, Annexure D and Annexure E.


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How do I vote? You can vote on the relevant Scheme Resolution by appointing a proxy, representative or attorney to attend the relevant Scheme Meeting and vote on your behalf or by attending the relevant Scheme Meeting in person.


How will voting at the Scheme Meetings be conducted?

Voting at each of the Scheme Meetings will be conducted by way of a poll.

Every QMS Shareholder who is present in person or by proxy, representative or attorney at the relevant Scheme Meeting will have one vote for each QMS Share held by them.


When and where will the Scheme Meetings be held?

The General Scheme Meeting will be held on Thursday, 6 February 2020 at The RACV Club, 501 Bourke St, Melbourne VIC 3000, commencing at 10.00am (Melbourne time).

The Rollover Shareholders Scheme Meeting will be held immediately after the General Scheme Meeting on Thursday, 6 February 2020 at The RACV Club, 501 Bourke St, Melbourne VIC 3000.


When will the result of the Scheme Meetings be known?

The result of each relevant Scheme Meeting will be available during or shortly after the conclusion of the relevant Scheme Meeting and will be announced to ASX shortly after the conclusion of the Scheme Meetings.

Even if the relevant Scheme Resolution is passed at each of the relevant Scheme Meetings, the Scheme is subject to approval of the Court and satisfaction or waiver (if permitted) of all Conditions Precedent.

N/A

What happens to my QMS Shares if I do not vote, or if I vote against the Scheme, and the Scheme becomes Effective?

If you do not vote, or vote against the Scheme, and the Scheme nonetheless becomes Effective, any QMS Shares held by you on the Scheme Record Date (currently expected to be 5.00pm (Melbourne time) on Friday, 14 February 2020) will be transferred to BidCo and you will receive the Scheme Consideration on the Implementation Date, notwithstanding that you may not have voted or voted against the Scheme.

See Sections 3.2.4, 5.1, 5.2 and the definition of “Scheme Record Date” in Section 11.1.

What can I do if I wish to oppose the Scheme?

If you, as a QMS Shareholder, oppose the Scheme, you may: � call the QMS Shareholder Information Line on 1300 069 339 (within

Australia) or +61 3 9415 4275 (outside Australia);

� attend the General Scheme Meeting or the Rollover Shareholders Scheme Meeting (as applicable to you) either in person or by proxy, representative or attorney and vote against the relevant Scheme Resolution; and/or

� if QMS Shareholders pass the Scheme Resolutions at the Scheme Meetings and you wish to appear and be heard at the Second Court Hearing, you must lodge a notice of intention to appear at the Second Court Hearing and indicate opposition to the Scheme. You should seek professional advice as to how to do this.

See Important Notices, Section 3.3, Annexure D and Annexure E.

FINAL DIVIDEND

Will I be paid the Final Dividend?

The payment of the Final Dividend, if declared, is subject to determination by the QMS Board, which will be made and announced in early 2020.

If declared:

� the QMS Board will determine and announce the Final Dividend Record Date and the Final Dividend Payment Date; and

� QMS Shareholders will be entitled to receive the Final Dividend in respect of the QMS Shares they hold on the Final Dividend Record Date and will be paid the Final Dividend on the Final Dividend Payment Date.

See Section 5.3.


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Question Answer ReferenceCIRCUMSTANCES WHERE SCHEME DOES NOT PROCEED

Can the Scheme Implementation Deed be terminated?

The Scheme Implementation Deed may be terminated in certain circumstances. These are summarised in Section 5.5.4. If the Scheme Implementation Deed is terminated, the Scheme will not proceed.

See Section 5.5.4.

What happens if the Scheme does not proceed?

If the Scheme is not approved at the Scheme Meetings, or a Condition Precedent to the Scheme is not satisfied or (if permitted) waived, the Scheme will not be implemented.

If the Scheme is not implemented, QMS Shareholders will not receive the Scheme Consideration but will retain their QMS Shares.

In these circumstances, QMS will, in the absence of another proposal, continue to operate as a company listed on ASX and you will continue to hold your QMS Shares and continue to be exposed to risks and opportunities associated with your investment in QMS.

See Sections 3.4.2, 5.1 and 8.

Is there a break fee payable?

Under the Scheme Implementation Deed, QMS may be obliged to pay the Break Fee of $4.2 million to BidCo, if certain events occur.


The circumstances in which the Break Fee is payable by QMS are summarised in Section 5.5.5.

See Section 5.5.5.

IMPLEMENTING THE SCHEME

When will the Scheme become Effective?

Subject to the satisfaction or (if permitted) waiver of the Conditions Precedent, the Scheme will become Effective on the date on which the Court order approving the Scheme is lodged with ASIC (this is the Effective Date).

This is expected to occur on Tuesday, 11 February 2020.

See Section 5.4.3.

What happens on the Implementation Date?

On the Implementation Date: � QMS will pay the Cash Consideration received from BidCo to Scheme

Shareholders;

� HoldCo will issue the Scrip Consideration to the Rollover Shareholders (or their nominated related bodies corporate); and

� the Scheme Shares will be transferred to BidCo without Scheme Shareholders needing to take any further action.

Pursuant to the Scheme Implementation Deed, the Implementation Date is the fifth Business Day (or such other Business Day as the parties agree) following the Scheme Record Date for the Scheme, and is expected to be Friday, 21 February 2020.

No transfer of QMS Shares will occur to BidCo until the Cash Consideration has been dispatched and the Scrip Consideration issued.

See Section 5.4.7, the definition of “Implementation Date” in Section 11.1 and the Scheme in Annexure B.

When will I receive the Scheme Consideration?

Payment of the Cash Consideration and issue of the Scrip Consideration will occur in accordance with the Scheme on the Implementation Date.

The Implementation Date is currently expected to be Friday, 21 February 2020.

See Section 5.2.

How will I receive the Scheme Consideration?

Payment of the Cash Consideration will be made either: � to the nominated bank account advised to Share Registry as at the

Scheme Record Date; or

� if no account is nominated by Australian dollar cheque, sent by post to your registered address as shown on the QMS Share Register.

Any Scrip Consideration component of the Scheme Consideration will be issued to you (or your nominated related body corporate) by HoldCo.

See Section 5.2.


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What happens if I am entitled to fractional Scheme Consideration?

If a Scheme Shareholder becomes entitled to a fraction of a HoldCo Share as Scrip Consideration or a fraction of a cent as Cash Consideration, then the fractional entitlement to the HoldCo Share will be rounded down to the nearest whole number, and the fractional entitlement to a cent will be rounded up to the nearest cent.

BidCo and HoldCo may take steps to prevent QMS Shareholders from attempting to gain an unfair advantage from the rounding of Scheme Consideration by shareholding splitting or division.

See Section 5.2 and clause 5.11 of the Scheme in Annexure B.

What obliges BidCo and HoldCo to provide the Scheme Consideration?

BidCo and HoldCo have executed the Deed Poll pursuant to which they have undertaken in favour of each Scheme Shareholder to procure that each Scheme Shareholder is provided the Scheme Consideration to which they are entitled under the Scheme, in accordance with the terms of the Scheme and subject to the Scheme becoming Effective.

A copy of the Deed Poll is contained in Annexure C.

See Section 10.7 and Annexure C.

Can I keep my QMS Shares?

You cannot keep your QMS Shares if the Scheme is implemented.

If the Scheme is implemented, each Scheme Shareholder will receive (on the Implementation Date) the Scheme Consideration and your QMS Shares will be transferred to BidCo, even if you did not vote at all or if you voted against the Scheme Resolution.

If the Scheme is not implemented you will keep your QMS Shares.

See the Scheme in Annexure B.

WARRANTIES

Do I have to give any warranties in relation to my Scheme Shares?

Yes. Each Scheme Shareholder will be deemed to have warranted to QMS and BidCo that all of their QMS Shares will, at the Implementation Date, be fully paid and free from various encumbrances and interests of third parties of any kind, and restrictions on transfer of any kind, and that they have full power and capacity to transfer their QMS Shares to BidCo (together with all rights and entitlements attaching to such shares) and that they have no existing right to be issued any QMS Shares, or any other QMS securities.

See Section 5.4.8.

TAX IMPLICATIONS OF IMPLEMENTATION OF SCHEME

What are the taxation implications of the Scheme?

The taxation implications of the Scheme will depend on your personal circumstances.

A general outline of the main Australian taxation implications of the Scheme for certain QMS Shareholders is set out in Section 9 of this Scheme Booklet.

As this outline is general in nature, you should consult with your own taxation advisers for detailed tax advice regarding the Australian and, if applicable, foreign taxation implications for participating in the Scheme in light of the particular circumstances which apply to you before making a decision as to how to vote on the Scheme.

See Section 9.

Will I need to pay brokerage or stamp duty?

Scheme Shareholders will not incur any brokerage or stamp duty on the transfer of their Scheme Shares under the Scheme.

See Section 3.2.9.

FURTHER INFORMATION

Where can I get further information?

For further information, you can call the QMS Shareholder Information Line on 1300 069 339 (within Australia) or +61 3 9415 4275 (outside Australia).

See Chairman’s Letter.


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SECTION 5OVERVIEW OF THE SCHEME & SCHEME IMPLEMENTATION DEED

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QMS MEDIA LIMITED | SCHEME BOOKLET32 SECTION 5 – OVERVIEW OF THE SCHEME AND SCHEME IMPLEMENTATION DEED

5. OVERVIEW OF THE SCHEME AND SCHEME IMPLEMENTATION DEED5.1 SchemeOn the Scheme Announcement Date, QMS announced that it had entered into the Scheme Implementation Deed with BidCo, under which it is proposed that BidCo, will acquire all of the QMS Shares on issue by way of the Scheme.

The Scheme is a statutory procedure under the Corporations Act that is commonly used to enable one company to acquire another company.

If the Scheme is approved by QMS Shareholders at the Scheme Meetings and by the Court, and if all other necessary approvals and Conditions Precedent are satisfied or (if permitted) waived and the Scheme becomes Effective and is implemented, QMS will become a wholly-owned subsidiary of BidCo and will be delisted from the ASX. If the Scheme is approved and becomes Effective, you will be bound by the Scheme irrespective of whether you voted in favour of it at a Scheme Meeting or not.

If the Scheme is not approved, the Scheme will not proceed, you will not be bound by it and QMS will continue as a company listed on the ASX.

5.2 Scheme ConsiderationIf the Scheme is approved and implemented, Scheme Shareholders (including Rollover Shareholders if they do not make an Election to receive Scrip Consideration) will receive a total cash payment of $1.22 per QMS Share held, in return for the transfer of their QMS Shares to BidCo.

Payments will be made by direct deposit into Scheme Shareholders’ nominated bank account, as advised to the Share Registry as at the Scheme Record Date. If a Scheme Shareholder has not nominated a bank account, payment will be made by Australian dollar cheque posted to the Scheme Shareholder’s registered address as shown on the QMS Share Register.

If a Scheme Shareholder does not have a registered address, or QMS considers the Scheme Shareholder is not known at its registered address and no bank account has been nominated, payments due to the Scheme Shareholder will be held by QMS until claimed or applied under the relevant laws dealing with unclaimed money.

Rollover Shareholders are entitled to receive some or all of their Scheme Consideration as Scrip Consideration by making an Election.

If you are a Rollover Shareholder, you will receive any cash component of the Scheme Consideration in the manner stated above. The Scrip Consideration component of the Scheme Consideration will be effected by way of HoldCo procuring that your (or your nominated related body corporate’s) name is entered into the HoldCo share register as a HoldCo shareholder in respect of those HoldCo Shares to which you are entitled. HoldCo will send or procure the sending of a certificate reflecting the issue of those HoldCo Shares to your registered address on the Share Registry.

If a Scheme Shareholder becomes entitled to a fraction of a HoldCo Share as Scrip Consideration or a fraction of a cent as Cash Consideration, then the fractional entitlement to the HoldCo Share will be rounded down to the nearest whole number, and the fractional entitlement to a cent will be rounded up to the nearest cent.

Under clause 5.11(b) of the Scheme, BidCo and HoldCo may take steps to prevent QMS Shareholders from attempting to gain an unfair advantage from the rounding of Scheme Consideration by shareholding splitting or division.

5.3 Final DividendThe QMS Board currently intends to declare a fully franked dividend of up to 1.3 cents per QMS Share in respect of the financial year ending 31 December 2019 (Final Dividend). The QMS Board will decide on whether or not to declare the fully franked Final Dividend and announce this decision early in 2020. If the fully franked Final Dividend is declared the QMS Board will determine the Final Dividend Record Date and the Final Dividend Payment Date.

The Final Dividend Record Date, in those circumstances, would likely be the earlier of the Scheme Record Date and a date in March which would reflect QMS’ usual calendar of payment of dividends.

Accordingly, while the payment of the Final Dividend itself, if declared, is not conditional upon the Scheme becoming Effective, the timing of the payment may be accelerated to allow the payment before the implementation of the Scheme. The payment of the Final Dividend, if any, will not reduce the Scheme Consideration to be provided to Scheme Shareholders.

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QMS MEDIA LIMITED | SCHEME BOOKLET 33SECTION 5 – OVERVIEW OF THE SCHEME AND SCHEME IMPLEMENTATION DEED

5.4 Key steps in the Scheme5.4.1 Scheme approval requirementsIn order for the Scheme to become Effective, it must first be:

a. approved by the Requisite Majorities of QMS Shareholders at each of the Scheme Meetings; and

b. approved by the Court at the Second Court Hearing.

General Shareholders are asked (but not required) to vote on the General Scheme Resolution at the General Scheme Meeting, and the Rollover Shareholders are asked (but not required) to vote on the Rollover Shareholders Scheme Resolution at the separate Rollover Shareholders Scheme Meeting.

The Requisite Majorities for each Scheme Resolution are set out in section 411(4)(a)(ii) of the Corporations Act, and they are:

a. in relation to the General Scheme Resolution:

i. a majority in number (more than 50%) of the General Shareholders present and voting at the General Scheme Meeting (either in person or by proxy, representative or attorney); and

ii. at least 75% of the votes cast on the General Scheme Resolution at the General Scheme Meeting (either in person or by proxy, representative or attorney); and

b. in relation to the Rollover Shareholders Scheme Resolution:

i. a majority in number (more than 50%) of the Rollover Shareholders present and voting at the Rollover Shareholders Scheme Meeting (either in person or by proxy, representative or attorney); and

ii. at least 75% of the votes cast on the Rollover Shareholders Scheme Resolution at the Rollover Shareholders Scheme Meeting (either in person or by proxy, representative or attorney).

The Court has the power to waive the requirements in paragraphs (a)(i) and (b)(i) above.

If:

a. the Scheme is agreed by the requisite majorities of QMS Shareholders at each of the Scheme Meetings; and

b. all other Conditions Precedent have been satisfied or (if permitted) waived,

then QMS will apply to the Court for orders approving the Scheme.

Each QMS Shareholder has the right to appear at the Second Court Hearing.

5.4.2 Rollover Shareholders and Rollover Shareholders Scheme MeetingThe Rollover Shareholders are Barctin Superannuation Pty Ltd as trustee of Barctin Superannuation Fund, Wenvale Pty Ltd as trustee for the Barclay Nettlefold Family Trust (being entities controlled by Barclay Nettlefold) and John O’Neill Pty Ltd as trustee for the O’Neill Pastoral Discretionary Trust (being an entity controlled by John O’Neill).

As at 10 December 2019, being the trading day that is three trading days prior to the date of this Scheme Booklet, the Rollover Shareholders hold the following QMS Shares:

a. 370,465 QMS Shares are owned by Barctin Superannuation Pty Ltd as trustee of Barctin Superannuation Fund, being approximately 0.1% of the total QMS Shares on issue;

b. 45,868,006 QMS Shares are owned by Wenvale Pty Ltd as trustee for the Barclay Nettlefold Family Trust, being approximately 13.3% of the total QMS Shares on issue; and

c. 4,961,846 QMS Shares are owned by John O’Neill Pty Ltd, as trustee for the O’Neill Pastoral Discretionary Trust, being approximately 1.4% of the total QMS Shares on issue.

The rights of the Rollover Shareholders under the Scheme differ from those of the General Shareholders because the Rollover Shareholders may elect to receive Scrip Consideration for some or all of their QMS Shares but the General Shareholders may not.

The rights of the Rollover Shareholders under the Scheme are sufficiently different from those of the General Shareholders such that the Rollover Shareholders constitute a separate class of members for the purpose of voting on the Scheme.

The General Shareholders will vote at the General Scheme Meeting, but will not be permitted to vote at the Rollover Shareholders Scheme Meeting.

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Equally, the Rollover Shareholders will vote at the Rollover Shareholders Scheme Meeting, but will not be permitted to vote at the General Scheme Meeting.

Under the Voting and Rollover Agreements, the Rollover Shareholders have collectively agreed to receive HoldCo Shares in an amount equal to $43 million in value.

5.4.3 Effective DateIf the Court approves the Scheme and all other Conditions Precedent have been satisfied or (if permitted) waived, the Scheme will become Effective on the date when a copy of the Court order approving the Scheme is lodged with ASIC. QMS will, on the Scheme becoming Effective, give notice of that event on ASX.

5.4.4 Scheme Record DateThe Scheme Shareholders will be entitled to receive the Scheme Consideration in respect of the QMS Shares they hold as at the Scheme Record Date (which is currently expected to be Friday, 14 February 2020).

5.4.5 Dealings on or prior to the Scheme Record DateYou can transfer your QMS Shares on market at any time before close of trading on ASX on the Effective Date (which is currently expected to be Tuesday, 11 February 2020). The price you obtain on ASX may vary from the Scheme Consideration.

QMS intends to apply to ASX for QMS Shares to be suspended from official quotation on ASX from close of trading on the Effective Date. You will not be able to transfer your QMS Shares on market after this time.

You can transfer your QMS Shares off-market at any time on or before the Scheme Record Date, provided that the registrable transfer or transmission application is received at the Share Registry on or before the Scheme Record Date.

For the purpose of determining which QMS Shareholders are eligible to participate in the Scheme, dealings in QMS Shares will be recognised only if:

a. in the case of dealings of the type to be effected using CHESS (Clearing House Electronic Subregister System), the transferee is registered on the QMS Share Register as the holder of the relevant QMS Shares at or before the Scheme Record Date; and

b. in all other cases, registrable transmission applications or transfers in respect of those dealings are received by the Share Registry on or before the Scheme Record Date.

For the purposes of determining entitlements under the Scheme, QMS will not accept for registration or recognise any transfer or transmission applications in respect of QMS Shares received after the Scheme Record Date or received prior to the Scheme Record Date but not in registrable or actionable form.

If you transfer your QMS Shares before the Voting Eligibility Date, you will not be entitled to vote at that Scheme Meeting.

If you transfer your QMS Shares before the Scheme Record Date, you will not receive the Scheme Consideration.

5.4.6 Dealings after the Scheme Record DateFor the purposes of determining entitlements to the Scheme Consideration, QMS must maintain the QMS Share Register in its form as at the Scheme Record Date until the Scheme Consideration has been paid to the Scheme Shareholders. The QMS Share Register in this form will solely determine entitlements to the Scheme Consideration.

After the Scheme Record Date:

a. all statements of holding for Scheme Shares will cease to have effect as documents relating to title in respect of such Scheme Shares; and

b. each entry on the QMS Share Register relating to the Scheme Shares will cease to have effect except as evidence of entitlement to the Scheme Consideration in respect of such Scheme Shares.

5.4.7 Implementation DateThe Implementation Date is, subject to certain conditions set out in the Scheme, the fifth Business Day after the Scheme Record Date. The Implementation Date is currently expected to be Friday, 21 February 2020.

Prior to implementation of the Scheme, and by the Business Day prior to the Implementation Date, BidCo must pay or procure the payment into a trust account nominated by QMS the aggregate of the Cash Consideration payable to Scheme Shareholders.

SECTION 5 – OVERVIEW OF THE SCHEME AND SCHEME IMPLEMENTATION DEED

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On the Implementation Date:

a. QMS will pay the Cash Consideration received from BidCo to Scheme Shareholders;

b. HoldCo will issue the Scrip Consideration to the Rollover Shareholders (or their nominees); and

c. the Scheme Shares will be transferred to BidCo without Scheme Shareholders needing to take any further action.

5.4.8 Warranties by Scheme ShareholdersThe Scheme provides that each Scheme Shareholder is taken to have warranted to BidCo, and appointed and authorised QMS as its attorney and agent to warrant to BidCo on its behalf, that:

a. all their Scheme Shares (including any rights and entitlements attaching to their Scheme Shares) which are transferred under this Scheme will, at the time of transfer of them to BidCo, be fully paid and free from all:

i. mortgages, charges, liens, encumbrances, pledges, security interests (including any ‘security interests’ within the meaning of section 12 of the Personal Properties Securities Act 2009 (Cth)) and interests of third parties of any kind, whether legal or otherwise; and

ii. restrictions on transfer of any kind;

b. they have full power and capacity to transfer their Scheme Shares to BidCo together with any rights attaching to those Scheme Shares; and

c. except as otherwise provided for or contemplated in the Scheme Implementation Deed, they have no existing right to be issued any QMS Shares, or any other QMS securities.

5.4.9 Delisting from ASXQMS will apply to ASX to suspend trading in QMS Shares with effect from the close of trading on the Effective Date.

QMS will apply for cessation of the official quotation of QMS Shares on the ASX and to have itself removed from the official list of the ASX, with effect on and from the close of trading on the trading day immediately following, or shortly after, the Implementation Date.

5.5 Summary of Scheme Implementation DeedThe Scheme Implementation Deed contains terms and conditions which are standard for these types of agreements, including in relation to the parties’ obligations to implement the Scheme and QMS’ obligation to conduct its business in the ordinary course during the Scheme process.

A summary of the key elements of the Scheme Implementation Deed is set out below. The Scheme Implementation Deed was lodged with ASX on 29 October 2019 and can be obtained from www.asx.com.au or from https://www.qmsmedia.com/investors/investor-services/.

5.5.1 ConditionsImplementation of the Scheme is subject to the following Conditions Precedent which must be satisfied or (if permitted) waived before the Scheme can be implemented:

a. FIRB approval: before 5.00pm on the Business Day before the Second Court Date, one of the following has occurred:

i. the Treasurer has provided written no objection notification to the Scheme either without conditions or with conditions acceptable to BidCo (acting reasonably); or

ii. following notice of the proposed Scheme having been given under FATA, the Treasurer has ceased to be empowered to make any order under Division 2 of Part 3 of the FATA because the applicable time limit on making orders and decisions under the FATA has expired.

b. NZ OIO approval: before 5.00pm on the Business Day before the Second Court Date, BidCo receives in writing all consents required under the Overseas Investment Act 2005 (New Zealand) and the Overseas Investment Regulations 2005 (New Zealand) for the implementation of the Scheme either unconditionally or on terms acceptable to BidCo (acting reasonably);

c. no restraints: by the Specified Time, there is no temporary or final order, decision or decree in effect issued by any court of competent jurisdiction or Government Agency which restrains, prohibits, or otherwise materially adversely impacts upon, the Scheme;

d. QMS Shareholder approval: the Scheme is approved by QMS Shareholders and the order approving the Scheme comes into effect before the End Date;


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http://www.asx.com.au

https://www.qmsmedia.com/investors/investor-services/


e. Independent Expert: the Independent Expert issues an Independent Expert’s Report which concludes that the Scheme is in the best interests of QMS Shareholders and does not publicly withdraw, qualify or change that opinion at any time prior to the Specified Time;

f. Court approval: the Court approves the Scheme;

g. no QMS Prescribed Occurrence: no QMS Prescribed Occurrence occurs between (and including) the date of the Scheme Implementation Deed and the Specified Time;

h. no QMS Regulated Event: no QMS Regulated Event occurs between (and including) the date of the Scheme Implementation Deed and the Specified Time;

i. no QMS Material Adverse Change: no QMS Material Adverse Change occurs between the date of the Scheme Implementation Deed and the Specified Time;

j. BidCo Warranties: the BidCo Warranties are true and correct in all material respects on the date of the Scheme Implementation Deed and the Specified Time;

k. QMS Warranties: the QMS Warranties are true and correct in all material respects on the date of the Scheme Implementation Deed and the Specified Time;

l. COC Contracts: before the Specified Time, in respect of the COC Contracts, counterparties provide (not having withdrawn, cancelled or revoked):

i. written consent to the change of control or ownership of QMS, or a subsidiary of QMS; or

ii. written confirmation that they will not terminate the relevant COC Contract to which they are a party as a result of the fact that a change of control or ownership of QMS, or a subsidiary of QMS, will arise from implementation of the Scheme and, where the relevant COC Contract provides for termination for convenience or on notice, that they will not terminate the relevant COC Contract to which they are a party for convenience;

m.Scheme Implementation Deed and Deed Poll remain in force: neither the Scheme Implementation Deed nor the Deed Poll is terminated in accordance with its terms by the Delivery Time; and

n. other Court conditions: such as other conditions made or required by the Court in relation to the Scheme as are acceptable to QMS and BidCo (each acting reasonably) are satisfied.

5.5.2 Status of regulatory conditionsAs at the date of this Scheme Booklet:

a. FIRB approval: the Treasurer of the Commonwealth of Australia has provided a notice that there are no objections to the Transaction under the FATA; and

b. NZ OIO approval: BidCo has not yet received in writing all consents, approvals or clearances required under the Overseas Investment Act 2005 (New Zealand) and the Overseas Investment Regulations 2005 (New Zealand),

for the implementation of the Scheme.

An update on the status of the NZ OIO approval will be provided at the Scheme Meetings.

5.5.3 ExclusivityThe Scheme Implementation Deed contains certain exclusivity arrangements in favour of BidCo. These arrangements are in line with market practice and may be summarised as follows:

No shop

During the Exclusivity Period, QMS must not, and must ensure that none of its Related Bodies Corporate or their respective Authorised Persons, directly or indirectly, solicit, invite, initiate or encourage any Competing Proposal or any enquiries, proposals, discussions or negotiations in relation to, or which may reasonably be expected to lead to, a Competing Proposal, or communicate to any person any intention to do either of these things. This obligation does not extend to the MediaWorks Group.


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No talk

During the Exclusivity Period, QMS must not, and must ensure that its Related Bodies Corporate and their respective Authorised Persons do not, directly or indirectly, participate in or continue any negotiations or discussions with respect to, an actual, proposed, or potential Competing Proposal (or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Competing Proposal), or negotiate, accept or enter into, or offer or agree to negotiate, accept or enter into, any agreement, arrangement or undertaking regarding an actual, proposed or potential Competing Proposal.

QMS must not disclose or otherwise provide or make available any non-public information about the business or affairs of the QMS Group or the MediaWorks Group to a third party (other than a Government Agency) with a view to obtaining, or which would reasonably be expected to encourage or lead to receipt of, an actual, proposed or potential Competing Proposal. This includes, without limitation, providing such information for the purposes of the conduct of due diligence on the QMS Group.

No due diligence

During the Exclusivity Period, QMS must not directly or indirectly, solicit, initiate, facilitate, encourage or invite any person (other than BidCo, its affiliates or its Authorised Persons) to undertake due diligence investigations in respect of QMS or any QMS Group Member or MediaWorks or any member of the MediaWorks Group, in connection with such person formulating, developing or finalising a Competing Proposal, or make available to any person (other than BidCo, its affiliates or its Authorised Persons) or permit any such person to receive, any non-public information relating to QMS or any QMS Group Member or MediaWorks or any member of the MediaWorks Group, with a view to obtaining or which may reasonably be expected to lead to a Competing Proposal.

Notice of Competing Proposal

During the Exclusivity Period, QMS must notify BidCo in writing as soon as practicable but in any event within 24 hours:

a. if QMS Group or any of QMS’ Authorised Persons is approached by any person in relation to an actual or potential Competing Proposal, with such notice to set out reasonable details of the approach, including the material terms of the Competing Proposal and the identity of the third party making the Competing Proposal; or

b. of any request made by a third party for information in relation to QMS Group, that the QMS Board has reasonable grounds to suspect may be in connection with such third party formulating, developing or finalising, or assisting in the formulation of a Competing Proposal.

Matching Right

QMS must:

a. not, and must ensure that its Authorised Persons do not, enter into any legally binding agreement, arrangement or understanding in relation to a Competing Proposal; and

b. direct each QMS Director (other than Barclay Nettlefold) not to withdraw or change their recommendation or voting intention in response to a Competing Proposal, or publicly recommend, support or endorse a Competing Proposal;

unless the Competing Proposal is a Superior Proposal and QMS has given BidCo at least three Business Days to make a proposal that matches or exceeds the Competing Proposal.

Fiduciary Exceptions

QMS is not required to comply with its ‘No Talk’ and ‘No Due Diligence’ obligations if the QMS Board determines that complying with those provisions would be likely to constitute a breach of the fiduciary or statutory duties owed by the QMS Board.

These exclusivity arrangements are set out in full in clause 11 of the Scheme Implementation Deed.

QMS Shareholders should note that the Nettlefold Rollover Agreement contains ‘No Talk’ and ‘No Due Diligence’ obligations which will bind Barclay Nettlefold similar to those in the Scheme Implementation Deed except that they are not subject to fiduciary exceptions.


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5.5.4 Terminationa. Either QMS or BidCo can terminate the Scheme Implementation Deed:

i. (other than in respect of a breach of either a QMS Warranty or a BidCo Warranty) at any time before the Specified Time, if the other party has materially breached the Scheme Implementation Deed (including in relation to a QMS Prescribed Occurrence or a QMS Regulated Event), the party entitled to terminate has given written notice to the party in breach and the party in breach has failed to remedy the breach within five Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which the notice is given;

ii. at any time before the Specified Time if the Court or another Government Agency (including any other court) has taken any action permanently restraining or otherwise prohibiting or preventing the Transaction, or has refused to do anything necessary to permit the Transaction, and the action or refusal has become final and cannot be appealed or reviewed or the party, acting reasonably, believes there is no realistic prospect of a successful appeal or review succeeding by the End Date;

iii. if there is a breach or non-satisfaction of a Condition Precedent that has not been (if permitted) waived, or a Condition Precedent becomes incapable of satisfaction and the breach or non-satisfaction of that Condition Precedent that has occurred, or would otherwise occur, has not been waived; or

iv. the Effective Date for the Scheme has not occurred, or will not occur, on or before the End Date.

b. BidCo can terminate the Scheme Implementation Deed at any time before the Specified Time if:

i. any QMS Director (unless he or she has withdrawn his or her recommendation solely because of a requirement or request of a court or Government Agency) has withdrawn or adversely changed his or her Recommendation or Voting Intention, has made any public statement inconsistent with his or her Recommendation or Voting Intention, or has recommended, endorsed or supported any Competing Proposal;

ii. a Competing Proposal in respect of QMS is announced or made and is publicly recommended, supported or endorsed by a majority of the QMS Board;

iii. QMS materially breaches a QMS Warranty and BidCo gives a written notice to QMS setting out the relevant circumstances and stating an intention to terminate or allow the Scheme to lapse, the breach continues to exist five Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which such notice is given, and the breach is material in the context of the Scheme as a whole, or a QMS Regulated Event or QMS Prescribed Occurrence occurs; or

iv. a QMS Regulated Event or QMS Prescribed Occurence occurs.

c. QMS can terminate the Scheme Implementation Deed at any time before the Specified Time if:

i. a majority of the QMS Board withdraws their Recommendation as permitted under clause 6.3 of the Scheme Implementation Deed; or

ii. BidCo materially breaches a BidCo Warranty and QMS gives a written notice to BidCo setting out the relevant circumstances and stating an intention to terminate or allow the Scheme to lapse, the breach continues to exist five Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which such notice is given, and the breach is material in the context of the Scheme as a whole.

d. The termination of the Scheme Implementation Deed will not necessarily result in the termination of the Voting and Rollover Agreements and the Rollover Principals and the Rollover Shareholders may continue to be bound by the restrictions in those agreements notwithstanding that the Scheme Implementation Deed has terminated. Equally, the termination of the Voting and Rollover Agreements will not necessarily result in the termination of the Scheme Implementation Deed.


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5.5.5 Break FeeQMS has agreed to pay BidCo a reimbursement fee of $4.2 million (Break Fee) if:

a. change in recommendation: during the Exclusivity Period, any QMS Director withdraws or adversely changes their recommendation that QMS Shareholders vote in favour of the Scheme at the Scheme Meeting, unless:

i. the Independent Expert concludes in the Independent Expert’s Report (or any update of, revision or amendment or addendum to, that report) that the Scheme is not in the best interests of QMS Shareholders (except where that conclusion is due (in whole or in part) to the existence, announcement or publication of a Competing Proposal);

ii. the QMS Director is permitted to do so under clause 6.3(c) of the Scheme Implementation Deed; or

iii. in circumstances where QMS is entitled to terminate the Scheme Implementation Deed under clauses 13.1(a) or 13.2(a)(ii) of the Scheme Implementation Deed.

b. Competing Proposal announced and transaction subsequently completing: a Competing Proposal is announced prior to the date of the Scheme Meetings (whether or not such proposal is stated to be subject to any pre-conditions) and, within 12 months of the date of such announcement, the party that proposed the Competing Proposal:

i. completes a Superior Proposal; or

ii. acquires a Relevant Interest in more than 50% of QMS Shares under a transaction that is or has become wholly unconditional or otherwise comes to Control QMS or substantially all the assets of QMS.

c. BidCo terminates the Scheme Implementation Deed: BidCo terminates the Scheme Implementation Deed in the circumstances set out in paragraphs 5.5.4(a)(i) or 5.5.4(b) above and the Scheme has not become Effective prior to the date of termination subject to clause 12.2(b) of the Scheme Implementation Deed.


For full details of the Break Fee, see clause 12 of the Scheme Implementation Deed.

5.6 How QMS will respond to Competing ProposalsUntil the Scheme is approved by the Court, other parties may make unsolicited acquisition proposals for QMS.

If a Competing Proposal emerges prior to the Second Court Hearing, the QMS Board (other than Barclay Nettlefold as discussed below) will consider the Competing Proposal and ensure that QMS complies with the exclusivity arrangements in the Scheme Implementation Deed in relation to the Competing Proposal, including providing BidCo with notice of, and an opportunity to match, the Competing Proposal (see Section 5.5.3 above for a summary of those arrangements).

The QMS Board (other than Barclay Nettlefold) will carefully consider the Competing Proposal and determine whether it is a Superior Proposal. An exception to the exclusivity arrangements in the Scheme Implementation Deed allows them to do so.

QMS will keep you informed of any material developments, including by making announcements via the ASX. QMS Shareholders are encouraged to continue to monitor ASX announcements until the Scheme is implemented.

Barclay Nettlefold will not participate in discussions or decisions relating to a Competing Proposal unless the Nettlefold Rollover Agreement has been terminated, as he (and the Nettlefold Rollover Shareholders) is precluded from doing so, or voting in favour of a Competing Proposal, while that agreement remains operative.

Provided that Barclay Nettlefold and the Nettlefold Rollover Shareholders have complied with their obligations under clauses 3 (Exclusivity) and 4 (Standstill and other dealings) of the Nettlefold Rollover Agreement and QMS has complied with its obligations under clause 11 of the Scheme Implementation Deed, if the QMS Directors recommend a Superior Proposal in accordance with clause 6.3 of the Scheme Implementation Deed, the Nettlefold Rollover Agreement will be terminated.


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SECTION 6INFORMATION ABOUT QMS

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QMS MEDIA LIMITED | SCHEME BOOKLET 41SECTION 6 – INFORMATION ABOUT QMS

6. INFORMATION ABOUT QMS6.1 Group OverviewQMS is a leading digital outdoor and sports media company, with a strategic focus on quality digital assets and quality audiences, underpinned by the latest developments in technology and data.

The company currently operates three separate business segments:

a. QMS Australia: premium national portfolio of landmark digital billboards, complemented by static large format OOH billboards and the exclusive rights to advertising at Canberra Airport and on street furniture on the Gold Coast;

b. QMS Sport: global integrated sports platform at the forefront of technology development and the leading aggregator of sports media rights in Australia; and

c. MediaWorks: QMS holds a 40% shareholding in MediaWorks, a multi-media platform in New Zealand operating across Outdoor, Radio, TV and Digital.

In June 2015, QMS listed on the ASX with a market capitalisation of $163.5 million. Since then, QMS has further expanded its business operations in Australia, established QMS NZ via the acquisition of iSite NZ in 2015 and diversified its media and technology offerings into sport with key investments both in Australasia and internationally.

In November 2018, QMS announced a strategic merger between QMS NZ and MediaWorks, New Zealand’s leading independent radio, TV and digital business. The merger which completed in September 2019, created the leading multi-media advertising group in New Zealand. QMS holds a 40% shareholding in MediaWorks whilst funds managed by Oaktree Capital Management retain 60%.

Figure 6.1: Overview of QMS’ Key M&A Milestones since establishment

Key M&A

• QMS Australia• PT INsite Media

(Indonesia)• MMTB• Omnigraphics• Ambient

Advertising NZ

• IPO on ASX• Paramount Outdoor • Octopus Media• Drive By Media• iSite NZ

• ABSee• OAMM

• Total Outdoor Media

• Sportsmate• Go-Meeki/Fan

Tribe

• MediaWorks• ETC• 24 Outdoor• TGI (US)• TGIE (EU)• Stella Vista• TLA• Stride

CY2012 – 2014 CY2015 CY2016 CY2017 CY2018 CY2019

• Eastlink• Melbourne Square• VicTrack• Manboom• The Gabba

• Auckland Transport NZ

• Crown• Bali International &

Domestic Airport

• Key Sports Rights: • NRL • AFL • ARU • NZ Rugby• 6 Major Stadiums

• Canberra Airport• Key Sports Rights: • Netball

Australia • A-League • Supercars • NRL/Clubs • Sydney Kings

(NBL)

• Key Sports Rights: • MLS (US

Soccer) • UEFA • LNR (France) • ECB • La Liga• 8 Major Stadiums

• City of Canada Bay Contract

• VicRoads - Calder & Hume Contract

• Essendon Airport• SCG Trust

Contract extension

• ICC Cricket World Cup 2019

• Conmebol Copa Libertadores

• CONCACAF Gold Cup (US Soccer)

Color Key• Outdoor• Sport

Key OutdoorContracts & Sports Rights SecuredF

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6.2 Overview of business segmentsQMS’ three business segments are summarised below.

6.2.1 QMS AustraliaQMS Australia is primarily characterised by its premium quality OOH digital billboard portfolio and its continued investment in its intelligent data and insights program, which has enabled it to experience continued revenue and earnings growth in a dynamic and shifting media landscape.

QMS Australia reported revenue of $62.8 million and underlying EBITDA of $21.6 million for the six month period ended 30 June 2019 (six month period ended 30 June 2018: revenue $59.8 million and underlying EBITDA of $18.6 million).

The business’ digital-first strategy is reflected in its market leading digital revenue contribution of 81%, compared to the industry average of 56%. The introduction of a market first neuroscience program and development of a dynamic audience measurement platform underpins QMS’ reputation as the thought leaders and experts in digital billboards.

QMS Australia owns and operates diverse wide format print production facilities producing products for retail, point of sale, exhibition, vehicle wraps, banners, signage, street furniture, self-adhesive vinyls and large format billboards.

DIGITAL BILLBOARDS STREET FURNITURE

STATIC BILLBOARDS AIRPORTS

SECTION 6 – INFORMATION ABOUT QMS

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Figure 6.2: QMS Australia Portfolio

6.2.2 QMS SportQMS Sport represents a large scale global business, spanning 21 offices worldwide, with over 225 employees – 155 of which are located in Australia – and deploying approximately 16 kilometres of perimeter LED screens in stadia globally.

QMS Sport delivers a global integrated sports platform, providing advertisers with a unique and powerful opportunity to engage with this highly valued sports audience. QMS Sport holds long term agreements and relationships with some of the world’s top tier sports federations, leagues, codes, clubs and venues and is the market leader in in-stadia sport signage assets globally with access to 3,000+ global sporting events.

QMS Sport is leading the way in technology, infrastructure, sport software, fan engagement and the implementation of virtual and parallel advertising.

QMS Sport reported revenue of $39.6 million and underlying EBITDA of $11.4 million for the six month period ended 30 June 2019 (six month period ended 30 June 2018: revenue $18.1 million and underlying EBITDA of $3.3 million).


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Figure 6.3: QMS Sports’ Core Offerings

Highly visible LED signage

Dynamic virtual signage

Big screen & billboards

Connected stadium WIFI

Talent rep & sports marketing

� True in game TV exposure

� Broadcast live and in primetime

� Including replays, highlights & peripheral exposure

� High frequency

� Permanent in game brand exposure

� Broadcast live and in primetime

� Large Format Digital Screens dominating the stadium environment

� Primarily seen by attendance

� Opportunity to extend creative messaging at pre game or half time, includes sound

� In Stadium formats connect the live game experience via Mobile, Wi Fi and IPTV Screens

� Brand integration sponsor key sporting

� Moments and drive tactical offers in stadium

� Talent management across various sports e.g. AFL, Netball etc

� Creates and develops unique sporting events

� Brand & media consulting, venue sponsorship & in-stadia advertising

� Sport merchandise

6.2.3 MediaWorksIn December 2018, QMS announced that it had finalised terms for the merger of its New Zealand OOH, digital media and production businesses with MediaWorks, New Zealand’s leading independent radio, TV and digital business. The merger received approval from the NZ OIO on 29 July 2019, and was completed on 3 September 2019.

Prior to merger completion, QMS NZ reported revenue of $28.1 million and underlying EBITDA of $5.0 million for the six month period ended 30 June 2019 (six month period ended 30 June 2018: revenue $27.2 million and underlying EBITDA of $4.1 million).

The expanded (post merger completion) MediaWorks business currently operates the following portfolio of brands:

Outdoor Radio TVOverview � Outdoor: Provides out-of-home

advertising via digital and static large format billboards, airports, commuter network and transit media

� Sport NZ: Perimeter LED and on field virtual signage provider at major NZ rugby matches

� Print: Digital print services, complementary to outdoor advertising

� Publishing: Independent online publisher sales representation

� Operates a network of 9 unique radio formats on 190 frequencies throughout New Zealand

� Provides free-to-air television across New Zealand

� On 18 October 2019, QMS announced that MediaWorks has commenced the process to sell MediaWorks TV

Portfolio


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6.3 Board and Senior Management6.3.1 QMS BoardAs at the date of this Scheme Booklet, the QMS Board is comprised of the following directors:

Name Current position

Wayne Stevenson Independent Non-Executive Chairman

Anne Parsons Independent Non-Executive Director

Robert Alexander Independent Non-Executive Director

Ian Rowden Independent Non-Executive Director

Barclay Nettlefold Group Chief Executive Officer and Executive Director

David Edmonds Executive Director

Details of the interests of the QMS Board in QMS Shares and QMS Performance Rights are set out in Section 10.1.

6.3.2 QMS Senior ManagementAs at the date of this Scheme Booklet, QMS’ senior management is comprised of the following people:

Name Current position

Barclay Nettlefold Group Chief Executive Officer and Executive Director

David Edmonds Executive Director

John O’Neill QMS Australia – CEO

Kate Solomon Group Chief Financial Officer

Malcolm Pearce Group Chief Operating Officer and Company Secretary

Adam Trevena Chief Commercial Officer

Sara Lappage Chief Marketing Officer

Craig Kelly QMS Sport Australia – CEO

Rusty Lawrence QMS Sport International – Managing Director


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6.4 Corporate governanceThe QMS Board is responsible for the overall corporate governance of QMS.

Details below are the main corporate governance practices of QMS which are in place at the date of this Scheme Booklet. QMS also makes its corporate governance policies available on its website at https://www.qmsmedia.com/investors/investor-services/.

Corporate governance policy Description

Board Charter QMS has adopted a Board Charter that formalises its roles and responsibilities, including defining matters that are reserved for the QMS Board and setting out the powers and responsibilities of management.

The QMS Board consists of four independent non-executive directors and two executive directors. The performance of the QMS Board and senior management is assessed on an annual basis.

The QMS Board has established a Remuneration, Nomination and Corporate Governance Committee and an Audit and Risk Management Committee to assist the QMS Board in fulfilling its responsibilities.

Ethical and responsible decision making

QMS has adopted a written Code of Conduct which reflects its commitment to maintaining ethical standards in the conduct of QMS’ business in strict compliance with all laws and regulations. The Code of Conduct applies to all employees, managers and the directors of QMS.

QMS has established and disclosed on its website its Diversity Policy. Among other things, the Diversity Policy sets out QMS’ commitment to ensure that its corporate culture supports diversity in the workplace and that recruitment and selection practices are appropriately structured so that a diverse range of candidates are considered.

QMS has adopted a Securities Trading Policy which applies to directors, officers and employees of the QMS Group. The Securities Trading Policy identifies prohibited conduct under the Corporations Act in relation to dealings in QMS Shares and establishes procedures for dealing in QMS Shares.

Safeguard integrity in financial reporting

QMS has established an Audit and Risk Committee which assists the Board in fulfilling its oversight responsibilities in respect of QMS’ financial reporting, ethical standards and conduct, risk management systems, related party transactions and audit functions.

The Audit and Risk Committee is comprised of four directors, all of whom are independent non-executive directors. The Chair is an independent director who is not the Chairman of the QMS Board. The Audit and Risk Management Committee meets as required, at least four times a year.

The Audit and Risk Committee operates under a Charter approved by the QMS Board.

Market disclosure and Shareholder communications

QMS has adopted a Disclosure Policy and established a Disclosure Committee comprised of the Chair of the Board and senior management to ensure compliance with its disclosure requirements under the Listing Rules and the Corporations Act.

The Disclosure Policy sets out the circumstances in which price sensitive information must be disclosed to the market and requires all staff to inform a member of the Disclosure Committee of any price sensitive information as soon as they become aware of it.

QMS aims to ensure that QMS Shareholders are informed in a timely and readily accessible manner of all matters which affect their investment in QMS through its Shareholder Communication Policy. Information is provided to QMS Shareholders through QMS’ annual and half-yearly reports, the investor relations section of QMS’ website, releases to the ASX and annual general meetings.


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Corporate governance policy Description

Risk management The Audit and Risk Committee is responsible for overseeing the effectiveness of QMS’ financial controls and systems and the risk management function and evaluating the structure and adequacy of QMS’ insurance coverage periodically.

QMS’ management is responsible for establishing QMS’ risk management framework, including identifying major and potentially major risk areas and developing QMS’ policies and procedures, which are designed effectively to identify, treat, monitor, report and manage key business risks. Each employee and contractor is to understand and manage the risks within their responsibility and boundaries of authority when making decisions and undertaking day to day activities.

Director’s fees and executive remuneration

The QMS Board has established a Remuneration, Nomination and Corporate Governance Committee which is responsible for reviewing and making recommendations regarding the general remuneration strategy, policy and practices for the QMS Group and the remuneration of executive directors and senior management of QMS, as well as reviewing and establishing the level of remuneration for non-executive directors.

The Remuneration, Nomination and Corporate Governance Committee is comprised of at least three members, all of whom are independent non-executive directors. The Chair of the committee is an independent director, non-executive director.

The Remuneration, Nomination and Corporate Governance Committee operates under a charter approved by the QMS Board.

6.5 Capital structure6.5.1 Capital structure and market capitalisation As at the date of this Scheme Booklet:

a. QMS has 344,737,836 QMS Shares on issue; and

b. there are 8,055,254 QMS Performance Rights issued by the QMS Board and outstanding. A further 481,621 QMS Performance Rights have been offered but are yet to be issued as they are subject to QMS Shareholder Approval.

See Section 10.8 for further information on the intended treatment of QMS Performance Rights in connection with the Scheme.

6.5.2 Substantial holdersBased on filings to ASX, the substantial holders of QMS Shares as at 10 December 2019 there were six substantial shareholders in QMS (excluding Quadrant Private Equity). The substantial shareholders were as follows:

QMS – substantial shareholders1,2

Shares held

Million % interest

Barclay Nettlefold 46.2 13.4

Goldman Sachs 31.2 9.1

Ellerston Capital 29.2 8.5

Sand Grove Capital Management 23.2 6.7

Burgundy Asset Management 22.5 6.5

Credit Suisse 18.4 5.3

Note:[1] Rounding differences may exist.[2] Excludes Quadrant, see below.Source: Notice of substantial shareholder notices and change in director interest notices released to the ASX.


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Whilst Quadrant Private Equity is also (legally) considered a substantial shareholder, this is only because it has a relevant interest in the QMS Shares held by the entities associated with Barclay Nettlefold and John O’Neill through the operation of the Voting and Rollover Agreements (i.e. Quadrant Private Equity does not own any QMS Shares in its own right).

The shareholdings listed in this Section 6.5.2 are disclosed to QMS by the shareholders by substantial holding notices and change in director interest notices received by 10 December 2019. Information in regard to substantial holdings arising, changing or ceasing after 10 December 2019 or in respect of which QMS has not been advised or has not otherwise been disclosed, is not included above.

6.6 Group StructureThe following entities are Subsidiaries of QMS:

Controlled Subsidiaries Principal place of business

Ownership interest on or after 30 June 2019

Ownership interest on 31 December 2018

TLA Worldwide (Aust) Pty Ltd* Australia - -

TLA Merchandise Pty Ltd* Australia - -

Stride Sports Management Holdings Pty Ltd* Australia - -

TLA ESP Limited* UK - -

TGI Media Corporation United States of America 90% -

TGI Systems Corporation United States of America 90% -

TGI Europe Gmbh Germany 90% -

Stella Vista International Limited United Kingdom 90% -

MMTB Pty Ltd Australia 100% 100%

MMT Land Pty Ltd Australia 100% 100%

Omnigraphics Australia Pty Ltd Australia 100% 100%

QMS Australia Pty Ltd Australia 100% 100%

QMS Rail Media Pty Ltd Australia 100% 100%

QMS Australian Holdings Pty Ltd Australia 100% 100%

Q Media Pty Ltd Australia 100% 100%

Standout Media Pty Ltd Australia 100% 100%

QMS Insite Media Pte Ltd Singapore 100% 100%

PT INsite Media Indonesia 51% 51%

The Digital Outdoor Group Pty Ltd Australia 50% 50%

Digital Outdoor Media (Aust) Pty Ltd Australia 100% 100%

Digital Outdoor Media (NSW) Pty Ltd Australia 100% 100%

Digital Outdoor Media (QLD) Pty Ltd Australia 100% 100%

Digital Outdoor Media (VIC) Pty Ltd Australia 100% 100%

Digital Outdoor Media (WA) Pty Ltd Australia 100% 100%

Riverview Signage Trust Australia 100% 100%

Riverview Signage Pty Ltd Australia 100% 100%


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Controlled Subsidiaries Principal place of business

Ownership interest on or after 30 June 2019

Ownership interest on 31 December 2018

QMS NZ Outdoor Media Holdings Limited (New Zealand) New Zealand 100% -

QMS NZ Outdoor Media Limited (New Zealand) New Zealand 100% -

Paramount Outdoor Pty Ltd Australia 100% 100%

Plexity Holdings Pty Ltd Australia 100% 100%

BMG Australasia Pty Ltd Australia 95% 95%

Australian Billboard Company Pty Ltd Australia 100% 100%

Elwood Outdoor Advertising Pty Ltd Australia 100% 100%

Skyline Digital Pty Ltd Australia 100% 100%

Octopus Property Pty Ltd Australia 100% 100%

QMS Sport Pty Ltd Australia 100% 80%

Rpple Media Pty Ltd Australia 51% 51%

Live Docklands Pty Ltd Australia 100% 100%

World Sports and Entertainment Holdings Pty Ltd Australia 100% 100%

Sportsmate Technologies Pty Ltd Australia 100% 100%

World Sports and Entertainment Technologies Pty Ltd Australia 100% 100%

Gomeeki Operations Pty Ltd Australia 51% 51%

QMS Sport Holdings Limited Australia 100% -

QMS Sport (Europe) Holdings Pty Ltd Australia 100% -

QMS Sport (US) Holdings Pty Ltd Australia 100% -

Equity Accounted Investments Principal place of business

Ownership interest 1 September 2019

Ownership interest 31 December 2018

Mediaworks Investments Limited New Zealand 40% -

*100% ownership interest acquired after 30 June 2019.


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6.7 Recent QMS share price performanceQMS Shares are listed on the ASX and trade under the code “QMS”.

Chart 6.1: Price of QMS Shares for the six months ended on 10 December 2019

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

QMS S&P/ASX200

QM

S M

edia

Sha

re P

rice

36.3% premium to the undisturbed

closing price

Scheme Consideration $1.22

$1.235 Scheme Announced (29-Oct-19)

$0.895 Undisturbed closing price pre press speculation (23-Oct-19)

Source: S&P Capital IQ, as at 10 December 2019 close

Note: The S&P/ASX 200 Index has been rebased to the closing price of QMS Media on 11 June 2019, being $0.765 per share

During the six months ended on 10 December 2019:

a. the highest recorded daily closing share price for QMS Shares was $1.235 on 29 October 2019, being the date of the announcement of the Scheme and the potential payment of the Final Dividend; and

b. the lowest recorded daily closing share price for QMS Shares was $0.765 on 11 June 2019.

6.8 Financial information The financial information in this Section is a summary only and has been prepared and extracted for the purposes of this Scheme Booklet only. The financial information has been extracted from QMS’ financial results for the six months ended 30 June 2019, six months ended 31 December 2018, full year ended 30 June 2018 and six months ended 31 December 2017, which were each audited and reviewed by KPMG.

Further details about QMS’ financial performance can be found on QMS’ website at https://www.qmsmedia.com/investors/investor-services/

6.8.1 Basis of preparation The financial information of QMS is presented in an abbreviated form and does not contain all the disclosures, presentations, statements or comparatives that are usually provided in an annual report prepared in accordance with the Corporations Act, and should therefore be read in conjunction with the financial statements for the respective periods, including the description of accounting policies contained in those financial statements and the notes to those financial statements.

QMS considers that, for the purposes of this Scheme Booklet, the financial information presented is more meaningful to QMS Shareholders. The financial information of QMS has been prepared in accordance with the recognition and measurement principles contained in the Australian Accounting Standards.

The financial information in this Scheme Booklet is presented on a standalone basis and accordingly does not reflect any impact of the Scheme.


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6.8.2 Consolidated Statement of Profit or LossThe following table presents QMS’ consolidated statement of profit and loss for CY2018 (year ended 31 December 2018), H1CY2019 (six months ended 30 June 2019), H1CY2018 (six months ended 30 June 2018), H2CY2018 (six months ended 31 December 2018) and H2CY2017 (six months ended 31 December 2017).

Restatement refers to the prior comparable period 30 June 2018 which has been adjusted to show continuing operations separately from discontinuing operations.

Statement of Profit or Loss (A$'000)

CY2018

12 mth period ended

31 Dec 2018

H1CY2019

6mth period ended

30 June 2019

H1CY2018

6mth period ended

30 June 2018

H2CY2018

6mth period ended

31 Dec 2018

H2CY2017

6mth period ended

31 Dec 2017

restated restated restated restated restated

Continuing operations

Revenue and other income 157,274 100,764 77,921 79,353 65,547

Cost of sales (78,452) (26,471) (40,272) (38,180) (30,694)

Gross profit 78,822 74,293 37,649 41,173 34,853

Advertising and marketing expenses (876) (1,472) (375) (501) (348)

Consultancy fees (1,347) (1,000) (412) (935) (569)

Employee benefits expense (25,784) (18,031) (12,897) (12,887) (13,291)

Legal and professional fees (823) (486) (248) (575) (184)

Costs associated with acquisitions (1,840) (1,142) (303) (1,537) (110)

Office expenses (2,895) (1,029) (1,346) (1,549) (1,212)

Restructuring and integration costs (1,042) (269) (306) (736) (65)

Other expenses (5,556) (4,437) (2,070) (3,486) (3,137)

Depreciation expense (7,135) (18,364) (3,384) (3,751) (3,376)

Amortisation expense (9,816) (5,444) (4,652) (5,164) (3,289)

Operating profit 21,708 22,619 11,656 10,052 9,272

Finance income 3,298 1,181 1,610 1,688 639

Finance costs (8,222) (9,712) (3,870) (4,352) (1,828)

Net finance costs (4,924) (8,531) (2,260) (2,664) (1,189)

Share of loss from associates (19) - (19) - (744)

Profit before tax 16,765 14,088 9,377 7,388 7,339

Income tax expense (3,155) (4,911) (751) (2,404) (2,917)

Profit from continuing operations 13,610 9,177 8,626 4,984 4,422

Discontinuing operations

Profit from discontinuing operations, net of tax 3,984 7,275 1,409 2,575 3,925


Profit after tax attributable to:

Owners of the Company 17,305 14,907 9,873 7,432 8,206

Non-controlling interests 289 1,545 162 127 141



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6.8.3 Consolidated Statement of Financial Position The following table presents QMS’ consolidated statement of financial position as at 30 June 2019, 30 June 2018, 31 December 2018 and 31 December 2017.

Statement of Financial Position (A$'000)

30 June 2019

30 June 2018

31 December 2018

31 December 2017

restated restated restated restated

Assets

Cash and cash equivalents 15,813 22,654 16,238 25,248

Trade and other receivables 41,880 35,973 32,783 31,705

Inventories 732 819 723 729

Assets held for sale 128,215 8,109 80,852 -

Current tax assets 28 174 205 -

Other current assets 19,227 40,312 46,736 24,092

Total current assets 205,895 108,041 177,537 81,774

Property, plant and equipment 93,000 91,103 75,536 85,997

Other non-current 822 815 817 1,271

Deferred tax assets 8,066 6,259 6,210 5,508

Right-of-use asset 150,037 - - -

Investments 1,842 91 87 1,029

Intangible assets and goodwill 242,125 228,532 203,899 201,177

Total non-current assets 495,892 326,800 286,549 294,982

Total assets 701,787 434,841 464,086 376,756

Liabilities

Trade and other payables 28,574 18,856 20,256 17,596

Deferred revenue 8,575 6,948 3,840 3,986

Lease liability 32,576 - - -

Current tax liabilities 4,791 6,197 2,282 8,749

Loans and borrowings 179 1,327 590 1,211

Deferred and contingent consideration 7,637 14,621 2,620 2,245

Provisions 2,121 2,413 3,043 2,341

Other liabilities 30,052 13,600 7,472 9,444

Liabilities held for sale 57,052 780 14,294 -

Total current liabilities 171,557 64,742 54,397 45,572

Lease liability 130,537 - - -

Deferred and contingent 2,728 7,976 4,895 9,139

Loans and borrowings 169,661 132,002 169,432 98,796

Other non-current 7,678 2,010 2,618 2,026

Provisions 1,398 9,075 8,291 8,488

Deferred tax liabilities 6,044 7,816 5,710 8,548

Total non-current liabilities 318,046 158,879 190,946 126,997

Total liabilities 489,603 223,621 245,343 172,569

Net assets 212,184 211,220 218,743 204,187

Equity

Share capital 187,431 187,233 187,195 186,757

Reserves (9,460) (5,001) (641) (5,026)

Retained earnings 33,775 28,342 31,865 21,972

Total equity attributable to equity holders 211,746 210,574 218,419 203,703

Non-controlling interests 438 646 324 484

Total equity 212,184 211,220 218,743 204,187


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6.8.4 Consolidated Statement of Cash FlowsThe following table presents the historical consolidated statement of cash flows for FY2018 (year ended 30 June 2018), H1CY2019 (six months ended 30 June 2019), and H2CY2018 (six months ended 31 December 2018).

Restatement refers to the prior comparable period 30 June 2018 which has been adjusted to show continuing operations separately from discontinuing operations.

Statement of Cashflows (A$'000)`

FY2018

12 mth period ended 30 June 2018

H1CY2019

6mth period ended 30 June 2019

H2CY2018

6mth period ended 31 Dec 2018

restated restated restated

Continuing operations

Cash flows from operating activities

Cash receipts from customers 147,557 95,390 74,809

Cash paid to suppliers and employees (121,238) (66,346) (61,841)

Interest paid (5,046) (3,034) (4,136)

Income taxes paid (4,698) (716) (6,253)

Net cash from operating activities 16,575 25,294 2,579

Cash flows from investing activities

Acquisition of subsidiaries, net of cash acquired (2,156) 749 262

Payments of acquisition costs (413) (1,142) (1,537)

Acquisition of property, plant and equipment (12,752) (9,161) (5,759)

Acquisition of intangible assets (31,655) (7,449) (11,036)

Deferred consideration payments (9,521) (1,964) (12,510)

Net cash used in investing activities (56,497) (18,967) (30,580)

Cash flows from financing activities

Transaction costs related to issue of shares (517) (6) (6)

Payment of loans to third party (22,837) (348) (7,106)

Dividend paid (2,550) (2,797) (3,721)

Payments to associates 71 (5) (47)

Proceeds from sale of property, plant and equipment - 8,893 -

Payment of lease liabilities - (12,457) -

Receipt of borrowings (net) 75,311 (325) 37,901

Net cash from/(used in) financing activities 49,478 (7,045) 27,021

Net decrease in cash and cash equivalents 9,556 (718) (980)

Cash and cash equivalents at beginning of period 7,623 16,238 16,986

Effect of movements in exchange rates on cash held (193) 293 232

Cash and cash equivalents at period end 16,986 15,813 16,238

Discontinuing operations

Cash and cash equivalents at beginning of period 3,752 4,659 5,668

Net decrease in cash and cash equivalents 1,916 (683) (1,009)

Cash and cash equivalents at period end 5,668 3,976 4,659

Total cash and cash equivalents at period end 22,654 19,789 20,897


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SECTION 7 – INFORMATION ABOUT HOLDCO AND BIDCO

6.9 CY2019 guidanceIn an announcement to the ASX on 23 August 2019, QMS reaffirmed its earnings guidance that it expects CY19 EBITDA for the 12 months ending 31 December 2019 to be between $60 million to $62 million.

6.10 Material changes to QMS’ financial position since 30 June 2019Within the knowledge of QMS’ Directors and other than as disclosed in the Scheme Booklet or announced on the ASX, the financial position of QMS has not materially changed since 30 June 2019, being the date of QMS’ half-year financial report for the six months ended 30 June 2019.

Post 30 June 2019, the QMS Group has announced the following:

a. 3 September 2019: Completed the strategic merger of QMS New Zealand with MediaWorks, to form MediaWorks in September 2019.

Subsequent to issuing its H1 CY2019 financial statements, QMS completed the merger of its New Zealand businesses with MediaWorks.

Completion of this transaction resulted in the loss of control of the New Zealand businesses and accordingly, these businesses ceased to be consolidated from 1 September 2019.

On this date, the New Zealand net assets were removed from the QMS Balance Sheet and replaced with an investment representing the 40% shareholding held in the expanded MediaWorks business.

A summary of the major classes of assets and liabilities that were disposed of is presented in note 6 ‘Assets and liabilities held for sale’ of the 30 June 2019 half year report. From 1 September 2019, equity accounting for QMS’ 40% investment in MediaWorks applied.

As part of this transaction, QMS received a $38 million capital repayment which was used to repay part of QMS’ banking facility.

b. 6 September 2019: Completed the acquisition of TLA Worldwide (Aust) Pty Ltd and TLA-ESP Limited (now known as TLA Worldwide Limited) (together, TLA).

c. 10 September 2019: Completed the acquisition of Stride Sports Management Holdings Pty Ltd (Stride).

On a 12 month pro-forma basis the TLA and Stride acquisitions are together expected to contribute CY2019 EBITDA of approximately $6 million, pre synergies.

The total purchase price for both TLA and Stride was $32.7 million. This was partly funded by an equity raise of $15 million (less transaction fees), with the remainder funded through the QMS’ banking facility.

d. 18 October 2019: Announced that MediaWorks has commenced the process to sell MediaWorks TV as well as real estate associated with the free-to-air television business including its head office and studios.

6.11 QMS Director’s intentions for the business of QMSThe Corporations Regulations require a statement by the QMS Directors of their intentions regarding QMS’ business. If the Scheme is implemented, the existing QMS Directors (other than Barclay Nettlefold) will resign and the QMS Board will be reconstituted in accordance with the instructions of BidCo after the Implementation Date.

Accordingly, it is not possible for the QMS Directors (other than Barclay Nettlefold) to provide a statement of their intentions after the Scheme is implemented regarding:

a. the continuation of the business of QMS or how QMS’ existing business will be conducted;

b. any major changes, if any, to be made to the business of QMS; or

c. any future employment of the present employees of QMS.

If the Scheme is implemented, BidCo will own and control all of QMS’ securities. The QMS Directors have been advised that the intentions of BidCo with respect to these matters are set out in Section 7.6 and Barclay Nettlefold shares these intentions subject also to the qualifications set out in Section 7.6.1.

If the Scheme is not implemented, the QMS Directors intend to continue to operate in the ordinary course of the business of QMS.

6.12 Risks relating to QMS’ businessThere are existing risks relating to QMS’ business and an investment in QMS. If the Scheme does not become Effective, those risks continue to be relevant to QMS Shareholders. A summary of the key risks relating to QMS’ business and an investment in QMS is set out in Section 8.


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6.13 Publicly available information QMS is a listed disclosing entity for the purposes of the Corporations Act and as such is subject to regular reporting and disclosure obligations. Specifically, as a company listed on the ASX, QMS is subject to the Listing Rules which require (subject to some exceptions) immediate disclosure of any information of which QMS becomes aware that a reasonable person would expect to have a material effect on the price or value of QMS Shares.

Further, the Listing Rules require regular disclosure regarding various matters about the company.

ASX maintains files containing publicly disclosed information about all companies listed on the ASX. Information disclosed to ASX by QMS is available on ASX’s website at www.asx.com.au.

In addition, QMS is required to lodge various documents with ASIC. Copies of documents lodged with ASIC by QMS may be obtained from an ASIC office.

QMS Shareholders may obtain a copy of:

a. QMS’ 2018 Annual Report (being the last full year financial statements given to ASX);

b. QMS’ statutory financial statement for the half-year ended 31 December 2018;

c. QMS’ 2019 Annual Report (being for the half-year ended 31 December 2018 due to the change in financial year); and

d. the financial results presentation for the financial half-year ended 30 June 2019,

free of charge, by calling the QMS Shareholder Information Line on 1300 069 339 (within Australia) or +61 3 9415 4275 (outside of Australia) between 8.30am and 5.00pm (Melbourne time) on Business Days, or from ASX’s website at www.asx.com.au.

6.14 Information about QMSA list of announcements made by QMS to ASX from the Announcement Date to 10 December 2019, being the last practicable date before the date of this Scheme Booklet are set out below.

Announcement DateBecoming a substantial holder - Quadrant Private Equity 30 October 2019

Appendix 3B 30 October 2019

Change of Director’s Interest Notice 30 October 2019

Change of Director’s Interest Notice 30 October 2019

Becoming a substantial holder 30 October 2019

Change in substantial holding 31 October 2019

Becoming a substantial holder 1 November 2019

Change in substantial holding 1 November 2019


Appendix 3B 6 November 2019

Change of Director’s Interest Notice 6 November 2019

Change of Director’s Interest Notice 6 November 2019


Ceasing to be a substantial holder 11 November 2019



Letter to Shareholders re Mr David Edmonds 12 November 2019





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Announcement DateCeasing to be a substantial holder 14 November 2019



Becoming a substantial holder from MS 15 November 2019


Becoming a substantial holder from MUFG 15 November 2019

Ceasing to be a substantial holder from MS 19 November 2019

Ceasing to be a substantial holder from MUFG 19 November 2019


Media Speculation 2 December 2019

Becoming a substantial holder 10 December 2019


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SECTION 7INFORMATION ABOUT HOLDCO & BIDCO

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7. INFORMATION ABOUT HOLDCO AND BIDCO7.1 IntroductionThis Section 7 has been prepared by, and is the responsibility of, BidCo. This Section 7 contains information relating to Quadrant Private Equity, its co-investors, BidCo, HoldCo and the Rollover Shareholders, and outlines how BidCo is funding the Scheme Consideration and its vision, intentions, views and opinions in relation to QMS.

7.2 Overview of Quadrant Private Equity Quadrant Private Equity is one of Australia’s largest independent private equity firms, managing and advising more than $4.6 billion in private equity capital. Quadrant Private Equity invests in management buyouts, management buy-ins and growth capital opportunities in Australia and New Zealand. Quadrant Private Equity is intending to invest in QMS through the following trusts:

a. Quadrant Private Equity No. 6A Pty Limited (ACN 622 297 750) as trustee for Quadrant Private Equity No. 6A (QPE6A);

b. Quadrant Private Equity No. 6B Pty Limited (ACN 622 297 778) as trustee for Quadrant Private Equity No. 6B (QPE6B);

c. Quadrant Private Equity No. 6C Pty Limited (ACN 622 297 769) as trustee for Quadrant Private Equity No. 6C (QPE6C);

d. Quadrant Private Equity No. 6D Pty Limited (ACN 622 297 787) as trustee for Quadrant Private Equity No. 6D (QPE6D);

e. QPE No. 6LP Pty Limited (ACN 622 297 741) as trustee for Quadrant Private Equity QMS A (QPE Media A); and

f. QPE No. 6LP Pty Limited (ACN 622 297 741) as trustee for Quadrant Private Equity QMS B (QPE Media B),

(the Quadrant Fund Entities).

The limited partners in the Quadrant Fund Entities are passive investors, and the Quadrant Fund Entities will be managed by Quadrant Private Equity.

Together, QPE6A, QPE6B, QPE6C, QPE6D, QPE Media A and QPE Media B are referred to in this Scheme Booklet as the Quadrant Funds.

7.3 Overview of BidCo and HoldCo7.3.1 BidCoBidCo is a special purpose company controlled by Quadrant Private Equity that was incorporated on 21 June 2019. BidCo will acquire (under the Scheme) and will hold (following implementation of the Scheme) all the shares in QMS. BidCo is an unlisted Australian proprietary company that has not conducted business and does not own any assets or have any liabilities other than in connection with its incorporation, the entry into transaction documents in connection with the Scheme and the taking of such other actions as are necessary to facilitate the implementation of the Scheme (including actions in relation to the incurrence of costs, fees and expenses in connection with the Scheme). The ultimate holding company of BidCo is HoldCo.

7.3.2 HoldCoHoldCo is a special purpose company controlled by Quadrant Private Equity that was incorporated on 21 June 2019. HoldCo indirectly holds all the shares in BidCo and will issue (following implementation of the Scheme) securities in HoldCo to the Quadrant Funds Entities and the Rollover Shareholders.

HoldCo is an unlisted Australian proprietary company that has not conducted business and does not own any assets or have any liabilities other than in connection with its incorporation, the entry into transaction documents in connection with the Scheme and the taking of such other actions as are necessary to facilitate the implementation of the Scheme (including actions in relation to the incurrence of costs, fees and expenses in connection with the Scheme). The affairs of HoldCo are currently regulated under the HoldCo Constitution and HoldCo Shareholders Agreement (copies of which have been provided to the Rollover Shareholders).


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7.3.3 Ownership structureAs at the date of this Scheme Booklet, BidCo is a wholly-owned subsidiary of Shelley MidCo 2 Pty Ltd (ACN 634 292 229) (MidCo 2), which is a wholly-owned subsidiary of Shelley MidCo 1 Pty Ltd (ACN 634 291 866) (MidCo 1), which is in turn a wholly-owned subsidiary of HoldCo. On or prior to implementation of the Scheme, it is intended that the ownership of HoldCo will change such that HoldCo will be owned as illustrated in the diagram below.

HoldCo

MidCo 1

MidCo 2

BidCo

QMS MediaLimited andsubsidiaries

QuadrantPrivate

Equity No. 6A

QuadrantPrivate

Equity No. 6B

QuadrantPrivate

Equity No. 6C

QuadrantPrivate

Equity No. 6D

QuadrantPrivate

Equity QMS A

QuadrantPrivate

Equity QMS B

RolloverShareholders

HoldCo Shareholders

LEGEND:

Quadrant Funds

QMS Group Members

14.07%Ords

15.75% RPS 12.76% RPS 8.77%RPS 8.58%RPS 33.57% RPS 14.59% RPS 5.98%RPS

11.40% Ords 7.84%Ords 7.66%Ords 29.98%Ords 13.04%Ords

16.01% Ords

7.4 DirectorsThe initial directors of BidCo and HoldCo are Mr Jonathon Pearce, Mr Michael Hruby and Mr Victor Ha. Brief profiles of these current directors are set out below.

HoldCo intends to supplement or replace these directors with additional nominees.

Mr Jonathon PearceJonathon Pearce is a Partner at Quadrant Private Equity, having joined Quadrant in 2011. Mr Pearce has spent over 15 years in the private equity industry as both an advisor and principal investor in Ireland, the United Kingdom and Australia.

Mr Pearce is the Chairman of Quadrant portfolio companies Rockpool Dining Group and BBQs Galore, and a director of Rite Bite Group, Fitness and Lifestyle Group, The Entertainment and Education Group and Peter Warren Automotive. He was formerly a Director of Enrich Group, Real Petfood Company, City Farmers and Estia Health.

Mr Michael HrubyMichael Hruby joined Quadrant Private Equity in 2018 with nine years investing experience across private equity and core-plus infrastructure. Most recently Michael was a senior member of the Morrison & Co investment team and played a key role in building the firm’s presence and funds under management in Australia. Michael commenced his career in the investment banking division of Credit Suisse in 2008 after completing an Honours Law Degree and Bachelor of Commerce at the University of Adelaide.

Michael is a Director of Quadrant Private Equity investee companies Junior Adventures Group and MotorOne.


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Mr Victor HaVictor Ha joined Quadrant Private Equity in 2014 and has been involved in the portfolio management of a range of current and former Quadrant investee companies including Fitness and Lifestyle Group, TEEG, RiteBite Group, Rockpool Dining Group and The Real Petfood Company. Prior to joining Quadrant, he worked in the Investment Banking Division of Morgan Stanley.

Victor holds a Bachelor of Commerce (with Distinction) from the University of New South Wales and is a Member of CPA Australia.

7.5 Funding of the Scheme Consideration7.5.1 Cash Scheme ConsiderationThis Section 7.5 outlines how BidCo intends to fund the Scheme Consideration. The Scheme is not subject to any financing condition precedent.

Equity facilities

HoldCo has entered into legally binding equity commitment letters with the Quadrant Funds, under which those entities agree to provide to HoldCo an aggregate amount of up to $338,250,000 if the Scheme becomes Effective (Equity Funding).

BidCo has then entered into a legally binding equity commitment letter with HoldCo, under which HoldCo agrees to provide to BidCo an aggregate amount of up to the Equity Funding if the Scheme becomes Effective.

As indicated above in Section 7.2, each of the Quadrant Fund Entities is managed by Quadrant Private Equity, and each has access to cash funding that together is significantly greater than the aggregate equity commitments to HoldCo.

The Equity Funding is to be provided for the sole purposes of providing the Scheme Consideration payable by BidCo to Scheme Shareholders under the Scheme, the refinancing of existing QMS debt, and associated transaction costs. Any costs in addition to this will require further funding. The equity commitment letters are expected to be superseded prior to the Second Court Hearing by subscription arrangements with HoldCo on the same material terms contemplated by the equity commitment letters.

The provision of the Equity Funding by the Quadrant Funds is subject to certain limited conditions precedent which are customary for equity commitments of this kind and include (but are not limited to) all conditions precedent under the Scheme Implementation Deed being satisfied or waived and the Scheme becoming Effective.

Debt facilities

BidCo has entered into a legally binding debt commitment letter (Debt Commitment Letter) under which Nomura Singapore Limited (or an affiliate) and any other bank, financial institution or fund appointed by Nomura Singapore Limited has agreed to provide a secured debt (the Facility) in an amount of up to approximately $330,000,000 to BidCo (Debt Funding) to be made available to BidCo under a facilities agreement to be entered into by, amongst others, BidCo and the lenders. BidCo is permitted to use the proceeds of borrowings under the relevant Facility to fund, among other things, the Scheme Consideration and certain related transaction costs, fees, and expenses.

The Debt Funding is subject to the satisfaction of certain conditions precedent, which are customary for debt facilities of this kind and include (but are not limited to) BidCo’s confirmation that:

a. completion of the acquisition of the Scheme Shares has occurred or will occur in accordance with the Scheme Implementation Deed;

b. all material authorisations required to complete the acquisition of the Scheme Shares have been obtained and all conditions precedent to completion under the Scheme Implementation Deed have been, or will on the date of the first drawdown under the Facility, be satisfied or waived; and

c. there has been no termination of, amendment to, or waiver granted under the Scheme Implementation Deed provided to the lenders on or prior to the date of the Debt Commitment Letter which is materially prejudicial to the interests of the lenders unless the facility agent has provided its prior written consent (not to be unreasonably withheld).

It is expected that the Debt Commitment Letter will be superseded by a binding long form agreement and related documentation on the same material terms contemplated by the Debt Commitment Letter prior to the Second Court Date.


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It is expected that the conditions to the Debt Funding will be satisfied on or before the Second Court Date (other than certain conditions which are intended to be satisfied concurrently with, or prior to, the first drawdown under the Facility on or prior to the Implementation Date including the payment of fees and expenses).

7.5.2 Scrip ConsiderationBidCo expects that the number of HoldCo Shares to be issued to the Rollover Shareholders will be 32,250,000 ordinary shares in HoldCo and 10,750,000 redeemable preference shares in HoldCo (which is based on an issue price of $1.00 per HoldCo Share), although this is subject to QMS receiving valid Elections that the Rollover Shareholders have contractually committed (in favour of BidCo) to make under the Voting and Rollover Agreements (see Section 7.7 below). Based on an issue price of $1.00 per HoldCo Share the Scrip Consideration expected to be issued is valued at $43 million.

7.5.3 ConclusionOn the basis of the arrangements described above, BidCo believes that it will be able to satisfy its obligations to provide the Scheme Consideration as and when it is due under the terms of the Scheme, and considers that it has reasonable grounds for that belief.

7.6 BidCo’s intentions following implementation of the Scheme7.6.1 IntroductionIf the Scheme is implemented, BidCo will acquire and hold all of the QMS Shares on issue and, accordingly, QMS will become a wholly owned subsidiary of BidCo. This Section 7.6 sets out the intentions of BidCo with respect to QMS if the Scheme is implemented.

The statements of intention made in this Section 7.6 are statements of present intention only. These intentions are based on the facts and information concerning QMS (including certain Non-Public Information made available by QMS to BidCo prior to the entry into the Scheme Implementation Deed) and the general business environment that is known to BidCo at the time of preparation of this Scheme Booklet. BidCo does not currently have full knowledge of all material information, facts and circumstances that are necessary to assess all of the operational, commercial, taxation and financial implications of its current intentions. Final decisions on these matters will only be made by BidCo after having conducted a detailed review of QMS’ business after implementation of the Scheme. Accordingly, the statements set out in this Section 7.6 are statements of current intention only, which may change as new information becomes available or as circumstances change.

The intentions of HoldCo are the same as the intentions of BidCo.

7.6.2 General reviewIf the Scheme is implemented, BidCo intends to work with QMS’ management team to optimise the prospects and operating performance of the business, including new potential growth opportunities.

In order to achieve these outcomes, BidCo intends to undertake a detailed review of QMS’ operations covering strategic, financial and commercial operating matters. Final decisions about the future operating plan and management organisation for QMS will be made following the completion of such review and based on the facts and circumstances at the relevant time.

Subject to the findings of the post-implementation review referred to above, BidCo’s current intention is to continue the current strategic direction of QMS. In addition, if the Scheme is implemented, BidCo will seek to grow QMS’ business in the outdoor media and advertising sector as well as its sports business organically and through a range of other opportunities. These growth opportunities may involve the strategic acquisition of other businesses in these sectors.

7.6.3 Delisting from ASXIf the Scheme is implemented, it is intended that quotation of QMS Shares on ASX will be terminated and QMS will be removed from the official list of ASX on or around the Business Day immediately following the Implementation Date. It is also intended that BidCo will apply to convert QMS from a public to a proprietary company.

7.6.4 Head office If the Scheme is implemented, it is the intention of BidCo that QMS’ head office remains located in Melbourne, Victoria.


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7.6.5 QMS DirectorsIf the Scheme is implemented, the board of directors of QMS and each of its subsidiaries will be reconstituted with effect on and from the Implementation Date (although note that Barclay Nettlefold will remain a director of QMS, as set out in Section 6.11). QMS will become a wholly-owned subsidiary within the HoldCo group and board members will be appointed as appropriate for such an entity.

7.6.6 Employees BidCo considers QMS’ employees to be critical to the future success of the business. Following implementation of the Scheme, BidCo will review QMS’ business operations and organisational structure to ensure QMS has the appropriate mix and level of employees and skills to enhance the business going forward and to enable the business to pursue growth opportunities.

7.6.7 Changes to QMS’ constitution BidCo intends to replace QMS’ constitution with a constitution appropriate for a proprietary company limited by shares (consistent with the intention expressed in Section 7.6.3 to convert QMS into a proprietary company limited by shares following implementation of the Scheme).

7.7 Voting and Rollover AgreementsBidCo, the Rollover Shareholders and the respective Rollover Principals entered into the Voting and Rollover Agreements on 29 October 2019. The QMS Board was not involved in the negotiation of the Voting and Rollover Agreements.

The Voting and Rollover Agreements set out, amongst other matters, the framework and terms governing the relationship between BidCo, the Rollover Principals and the Rollover Shareholders in connection with the Scheme. The Voting and Rollover Agreements contain provisions pursuant to which the Rollover Principals and the Rollover Shareholders agree not to become involved in, vote in favour of, accept or otherwise support a Competing Proposal (as defined in the Voting and Rollover Agreements).

The Voting and Rollover Agreements also set out the Elections that the Rollover Principals and the Rollover Shareholders have contractually committed to make, being:

a. in relation to Barclay Nettlefold and the Nettlefold Rollover Shareholders: an election to receive Scrip Consideration in respect of such percentage of their QMS Shares as represents $40 million in value (in aggregate between the Nettlefold Rollover Shareholders) and the Cash Consideration in respect of the remainder of their remaining QMS Shares, and

b. in relation to John O’Neill and John O’Neill Pty Ltd as trustee for the O’Neill Pastoral Discretionary Trust: an election to receive Scrip Consideration in respect of such percentage of their QMS Shares as represents $3 million in value (in aggregate between John O’Neill and John O’Neill Pty Ltd as trustee for the O’Neill Pastoral Discretionary Trust) and the Cash Consideration in respect of the remainder of their remaining QMS Shares, and

Provided that the Rollover Principals and the Rollover Shareholders have complied with their obligations under clauses 3 (Exclusivity) and 4 (Standstill and other dealings) of their respective Voting and Rollover Agreement and QMS has complied with its obligations under clause 11 of the Scheme Implementation Deed, if the QMS Directors recommend a Superior Proposal in accordance with clause 6.3 of the Scheme Implementation Deed, the relevant Voting and Rollover Agreement will be terminated.

The termination of the Scheme Implementation Deed will not necessarily result in the termination of the Voting and Rollover Agreements and the Rollover Principals and the Rollover Shareholders may continue to be bound by the restrictions in those agreements notwithstanding that the Scheme Implementation Deed has terminated. Equally, the termination of the Voting and Rollover Agreements will not necessarily result in the termination of the Scheme Implementation Deed.

Full copies of the Voting and Rollover Agreements were annexed to a substantial shareholding notice lodged with the ASX by Quadrant Private Equity on 30 October 2019 and can be obtained from www.asx.com.au or from https://www.qmsmedia.com/investors/investor-services/.


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7.8 HoldCo Shares to be issued to Rollover Shareholders7.8.1 OverviewHoldCo Shares are subject to the HoldCo Constitution and will be subject to the HoldCo Shareholders’ Agreement, the terms of which have been provided to the Rollover Shareholders (who are the only QMS Shareholders entitled to make an Election to receive Scrip Consideration). The HoldCo Shareholders’ Agreement, along with the HoldCo Constitution, will set out the rights and liabilities attaching to HoldCo Shares.

The Rollover Shareholders should seek professional advice from a solicitor, an accountant, a tax adviser or other independent and qualified professional advisers in relation to the nature of the HoldCo Shares, the risk factors relating to holding HoldCo Shares in light of their own personal circumstances, and the rights and obligations that are set out under the HoldCo Constitution and that will be set out under the HoldCo Shareholders’ Agreement.

7.8.2 Rights and obligations of HoldCo SharesHoldCo Shares comprise ordinary shares and redeemable preference shares in HoldCo, further details of which are set out below.

Ordinary shares

A summary of the rights and obligations attaching to the ordinary shares of HoldCo, as will be set out in the HoldCo Shareholders’ Agreement to be entered into by HoldCo, the Quadrant Fund Entities and the Rollover Shareholders, is set out below:

� Voting rights: each ordinary share will be entitled to one vote at a meeting of shareholders;

� Decision making: the Quadrant Fund Entities have rights to appoint directors to the board of HoldCo. In addition, Barclay Nettlefold (while entities associated with him continue to hold HoldCo Shares) will have the right to be personally appointed as a director of the board of HoldCo. All HoldCo board decisions will be a simple majority;

� Dividends: ordinary shares in HoldCo will carry a right to receive dividends, with the declaration or payment of any dividend or other distribution to be approved by the HoldCo board of directors;

� Restrictions on transfer: HoldCo shareholders will not be permitted to transfer their HoldCo Shares other than with the consent of the Quadrant Fund Entities or in connection with other customary transfer provisions (such as the drag-along and tag-along provisions); and

� Exit arrangements: the Quadrant Fund Entities may initiate an exit process at its discretion at any time.

Preference shares

The proposed key terms of the preference shares to be issued by HoldCo to the Quadrant Fund Entities and the Rollover Shareholders are:

� Voting rights: the preference shares do not have any voting rights at meetings of HoldCo shareholders;

� Redemption Premium: each preference share will carry an entitlement to an annual coupon which is proposed to be a small margin above the interest rate applying to HoldCo’s senior debt. If the coupon is not paid in any year, the amount of the coupon will accumulate;

� Redemption: at the election of the HoldCo board, some or all of the preference shares may be redeemed by HoldCo upon the giving of notice in accordance with the terms of those preference shares;

� Conversion: on exit, the preference shares will be converted into such number of ordinary shares in HoldCo calculated in accordance with the terms having regard to the relevant redemption amount associated with the preference shares and the market value of ordinary shares at the time of exit;

� Liquidation preference: if there is a liquidation of HoldCo, the holders of preference shares will be entitled to receive payment of the then outstanding redemption amount; and

� Transferability: the preference shares will be subject to the rights and obligations in respect of transfer and exit arrangements applying to ordinary shares in HoldCo described above.


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7.8.3 Risk factorsRisk factors that apply to an investment in HoldCo following implementation of the Scheme may be materially different from those that apply to the Rollover Shareholders’ existing investment in QMS. For instance, certain risk factors applying to an investment in HoldCo following implementation of the Scheme will include that:

a. HoldCo is an unlisted Australian proprietary company and there will be no public market for the trading of HoldCo Shares, nor is there expected to be any such market in the near future. The ability to dispose of HoldCo Shares will also be significantly restricted under the HoldCo Shareholders’ Agreement, which will result in HoldCo Shares being substantially illiquid and may also affect the value of HoldCo Shares;

b. as the Listing Rules will not apply to HoldCo, investor protections currently available to the Rollover Shareholders in respect of their QMS Shares under the Listing Rules will not apply to the HoldCo Shares. For example, HoldCo is not subject to any requirement to disclose material price sensitive information to its shareholders or to ensure that classes of security are appropriate and equitable (including with respect to voting rights of holders of HoldCo Shares and any preference shares issued by HoldCo). Similarly, except as required under the HoldCo Shareholders’ Agreement, there will be no restrictions on HoldCo issuing new securities (which could result in the Rollover Shareholders being more easily diluted) or making significant changes to the nature or scale of HoldCo activities without shareholder approval;

c. on the basis that the Rollover Shareholders will validly Elect to receive the Scrip Consideration in the proportions prescribed under the Voting and Rollover Agreement (as described in Section 7.7), each Rollover Shareholder will be a minority shareholder in HoldCo. As such, the Rollover Shareholders will be subject to risks that are inherent in minority shareholdings with no substantial influence over a majority of decisions affecting HoldCo, both those made at meetings of the board of directors of HoldCo and at any general meeting of HoldCo shareholders. HoldCo is not required to hold an annual general meeting of members and the Rollover Shareholders may receive significantly less information and reports about HoldCo and QMS than the Rollover Shareholders currently receive about QMS;

d. subject to the terms of the HoldCo Shareholders’ Agreement to be entered into prior to the Implementation Date, future distributions will be determined by the HoldCo board. There is no guarantee that future distributions will be paid or, if they are paid, the amount of such distributions;

e. the Rollover Shareholders may be compelled (by other HoldCo shareholders) to sell or transfer their HoldCo Shares under various provisions that will be set out in the HoldCo Shareholders’ Agreement;

f. there is no guarantee that either BidCo or HoldCo will achieve their stated objectives or any of their statements of current or future intent as described in Section 7.6, or that any dividends or distributions will be paid to HoldCo shareholders following implementation of the Scheme;

g. consistent with usual private equity practice, the Quadrant Fund Entities may seek to exit its investment in HoldCo at some time in the future subject to then prevailing market conditions, the business’ performance and other factors which may be considered relevant at the time. There is no guarantee that the Rollover Shareholders will be able to achieve an exit in respect of their HoldCo Shares if a decision for exit is not made by BidCo. Conversely, there is no guarantee that the Rollover Shareholders will want to exit their investment in HoldCo Shares at the same time as the decision for exit is made by the Quadrant Fund Entities. Particular HoldCo shareholders may not agree with the exit strategy adopted or decisions made by the HoldCo shareholders generally, and may not receive the price and return on investment they expect; and

h. except as provided for by the HoldCo Shareholders’ Agreement, there will be no restrictions on persons in a position of influence such as related parties, or substantial holders, from entering into “related party” transactions with HoldCo and such transactions may not require shareholder approval.

This is a summary of certain risks associated with an investment in HoldCo following implementation of the Scheme. It is not intended to be, and is not, an exhaustive list of the risks associated with such an investment.

This Section 7 and other Sections of the Scheme Booklet that describe the HoldCo Shares do not contain the disclosures in relation to the HoldCo Shares that would be included in a disclosure document under Chapter 6D of the Corporations Act as the HoldCo Shares are being issued without such a disclosure document in accordance with section 708(8) of the Corporations Act.


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7.9 Additional information about BidCo, Quadrant Private Equity and the Rollover Shareholders 7.9.1 Interests in QMS SharesAs at the date of this Scheme Booklet, no Quadrant Group Member has any relevant interest or voting power in any QMS Shares, except pursuant to the Voting and Rollover Agreements which give rise to a Relevant Interest in:

a. 45,868,006 QMS Shares held by Wenvale Pty Ltd as trustee for the Barclay Nettlefold Family Trust;

b. 370,465 QMS Shares held by Barctin Superannuation Pty Ltd as trustee for Barctin Superannuation Trust; and

c. 4,961,846 QMS Shares held by John O’Neill Pty Ltd as trustee for the O’Neill Pastoral Discretionary Trust.

Under the confidentiality deed entered into between QMS and QPE Investment Pty Ltd on 11 September 2019 (Confidentiality Deed), it was agreed that certain entities associated with Quadrant Private Equity would not acquire QMS Shares or rights to acquire QMS Shares. Further details of the Confidentiality Deed are contained in Section 10.15.

7.9.2 Dealings in QMS Shares in the previous four monthsDuring the four months before the date of this Scheme Booklet, other than pursuant to the Scheme Implementation Deed, Scheme or Deed Poll (a copy of which is contained in Annexure C), neither BidCo nor any of its associates has agreed to provide consideration for QMS Shares under any transaction or agreement.

7.9.3 Benefits given during the previous four monthsDuring the four months before the date of this Scheme Booklet, neither BidCo nor any of its associates has given or offered to give or agreed to give a benefit to another person where the benefit was likely to induce the other person or an associate to vote in favour of the Scheme or dispose of QMS Shares, where the benefit was not offered to all QMS Shareholders.

7.9.4 Benefits to QMS DirectorsNeither BidCo nor its associates will be making any payment or giving any benefit to any current officers of QMS as compensation for, or otherwise in connection with, their resignation from their respective offices if the Scheme is implemented.

7.9.5 HoldCo Shares sold in previous three monthsNo HoldCo Shares were sold during the three months before the date of this Scheme Booklet.


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SECTION 8RISKS

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8. RISKS8.1 IntroductionThe QMS Board considers that it is appropriate for QMS Shareholders, in considering the Scheme, to be aware that there are a number of risk factors which could materially adversely affect the future operating and financial performance of QMS, as well as the value of QMS and its future dividends.

This Section outlines:

a. general investment risks (refer to Section 8.2); and

b. specific risks associated with your current investment in QMS Shares (refer to Section 8.3).

This Section 8 is a summary only. There may be:

� additional risks not currently known to QMS; or

� risks which are known to QMS but not currently considered material,

which may have a material adverse effect on QMS’ financial and operational performance now or in the future.

If the Scheme is implemented and you are registered as a QMS Shareholder on the Scheme Record Date, you will receive the Scheme Consideration, will cease to be a QMS Shareholder and will also no longer be exposed to the risks set out below (and other risks to which QMS may be exposed). If the Scheme does not proceed, you will continue to hold your QMS Shares and continue to be exposed to risks and opportunities associated with that investment while you continue to hold your QMS Shares.

In making your decision to vote on the Scheme Resolution, you should read this Scheme Booklet carefully.

You should carefully consider the risk factors outlined below and your individual circumstances. This Section 8 is general in nature only and does not take into account your individual objectives, financial situation, taxation position or particular needs.

While the Board recommends10 a vote in favour of the Scheme in the absence of a Superior Proposal, QMS Shareholders are encouraged to make their own independent assessment as to whether to vote in favour of the Scheme and to consider these risk factors as part of that assessment.

8.2 General investment risksThe market price of QMS Shares on ASX is influenced by a number of factors, including the following:

a. change in investor sentiment and overall performance of the Australian and international stock markets;

b. changes in sentiment in credit markets;

c. changes in general business, industry cycles and economic conditions including inflation, interest rates, exchange rates, commodity prices, employment levels and consumer demand;

d. changes in government fiscal, monetary and regulatory policies, including foreign investment;

e. natural disasters and catastrophes, whether of a global, regional or local scale; and

f. accounting standards which affect the financial performance and position reported by QMS.

These factors may vary across the markets in which QMS operates and have differing effects on different parts of QMS’ business and therefore the price of QMS Shares.

8.3 Specific risks associated with your current investment in QMS SharesThere are a range of business-specific risks associated with your current investment in QMS Shares, as set out below. You will only continue to be exposed to these risks if the Scheme does not proceed, in which case QMS will continue to operate as a stand-alone entity.

8.3.1 Exposure to the advertising industryThe financial performance of QMS is heavily dependent on the strength of OOH advertising expenditure. The out of home advertising industry has grown strongly since QMS was listed on ASX. A downturn in the general level of advertising expenditure or a shift in the allocation of advertising expenditure to other formats (e.g. television, print, radio, online) could negatively impact QMS’ financial performance.


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In periods of lower economic activity, companies may cut their advertising budgets more severely than they reduce spending in other areas. Because a substantial portion of QMS’ costs are fixed and do not vary with revenues, any reduction in advertising revenues caused by economic conditions or a shift from OOH to other advertising formats would have an adverse impact on QMS’ operating profit.

8.3.2 Increased competitionQMS will continue to compete for advertising revenue with other OOH advertising and multi-media operators, as well as with other media formats, such as radio, newspapers, magazines, television, direct mail, satellite radio and internet-based services, which are substitutable for OOH and other forms of multi-media advertising. The actions of existing competitors or the entry of new competitors may make it difficult for QMS to grow or maintain its revenues and could also result in increases in OOH site rents as a result of greater competition for new or renewed sites.

QMS’ competitors may develop services or advertising media that are equal or superior to those provided by QMS or that achieve greater acceptance and brand recognition. It also is possible that new competitors may emerge, or existing competitors may expand and rapidly acquire significant share in any of QMS’ business categories.

An increased level of competition for advertising spend may lead to lower advertising prices as QMS attempts to retain customers or may cause QMS to lose customers to competitors who offer lower prices and/or higher quality offerings. In addition, increased competition from alternative advertising services could result in an adverse effect on QMS’ future financial performance.

8.3.3 Competitors use of market powerThere are a number of segments in the OOH advertising market including roadside billboards, retail, transit and street furniture. QMS focuses on the roadside billboard segment. The OOH advertising market in Australia and New Zealand is dominated by two competitors to QMS. Those competitors have a larger inventory of advertising signage than QMS as well as having inventory other than roadside billboards and generally greater resources.

There is a risk that competitors of QMS will use their greater resources to push down margins to maintain or expand market share and to outbid QMS for concessions and advertising spend. Any action of this nature by its competitors will adversely affect QMS’ revenue, profits and prospects.

8.3.4 Changes in technology and impact on consumer and advertiser behaviourThe advertising industry will continue to be affected by changes in technology, with these changes resulting in increasing media options for consumers. If these changes drive advertising away from OOH advertising, it will reduce QMS’ ongoing revenue and impact negatively on margins.

QMS’ ability to compete and to generate digital revenue in the media industry effectively in the future may be impacted by its ability to maintain or develop appropriate technology platforms for the efficient delivery of its services. Maintaining or developing appropriate technologies may require significant capital investment by QMS and divert capital and management resources away from other expansion opportunities.

8.3.5 Loss of revenue from media agencies and key customersQMS is heavily reliant on its relationships with media agencies to sell OOH advertising space that it owns and/or manages. Accordingly, the loss of these relationships or a significant change in the media landscape could adversely impact QMS’ ability to generate revenues.

In addition, the loss of revenue from other key customers could impact QMS’ future operating and business performance. Specifically for QMS Sport, the inability to secure content rights, operational contracts and/or generate LED equipment sales could negatively impact QMS’ future revenues.

8.3.6 Loss of OOH advertising sites or failure to achieve lease renewals on favourable termsQMS gains access to OOH advertising sites through short, medium and long term contracts or concessions with landlords, asset owners and government agencies. Whilst the majority of QMS’ leases are long term, there is always the possibility that a site lease or key concession will be cancelled, not renewed, or not able to be renewed on terms which are favourable or acceptable to QMS. Further, leased sites may be subject to redevelopment rights or may become impaired in other ways, such as reduced visibility or cancellation of a head lease. If a lease is cancelled, not renewed or a site becomes impaired, it will reduce QMS’ future revenue and impact negatively on margins.

8.3.7 Employee recruitment risk and reliance on key management personnelQMS’ future success is strongly dependent upon the expertise and experience of its key personnel and senior management. QMS may not be able to retain these staff members in the future, or be able to find equivalent replacements, either at all, or in a timely manner.

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The future success of QMS is strongly dependent upon the experience and expertise of the executive management team. Loss of key management may result in a loss of intellectual property and experience, key relationships and/or business disruption with a resulting potentially adverse effect on QMS’ revenues and profits.

8.3.8 Government regulation of OOH advertisingWhilst the OOH advertising industry is largely self-regulated, there is the potential that new laws may be introduced at a state, federal or local level which have an adverse impact on the sector. For example, these laws may place bans on sector spending (e.g. alcohol, gambling). Whilst QMS’ management team work closely with the Outdoor Media Association (the peak national industry body) to formulate policy, there is a risk that future inhibiting regulations in the OOH sector may have a negative impact on QMS’ financial performance.

Government laws, regulations and policies have a significant impact on the OOH advertising sector and the business of QMS, including regulating the ability to erect and maintain roadside billboards, the size and location of billboards and advertising panels and, as with the advertising sector more broadly, the content of advertising. Such matters are controlled by local councils and various other governmental agencies. As such, QMS’ operations and revenues may be adversely affected by changes in policy adopted by such governmental agencies.

8.3.9 Digitisation and expansion strategy

Digital Strategy

QMS views conversion of static signage to digital as a key driver of revenue growth and margin. As QMS and its competitors continue to expand their digital network, there is a risk of saturation of the digital screen market which may consequently lead to yields on OOH sites being reduced with associated adverse impacts on QMS’ revenues and profitability.

QMS seeks to constantly expand its inventory of premium digital billboards. Failure to execute the roll out of billboards in accordance with planned timetables could negatively impact expected future revenue. There is a risk that acquiring future digital billboard sites will not generate the full benefits anticipated, nor result in the advertising revenues or earnings growth expected. The market for digital billboards has grown strongly since QMS was listed on ASX but there is no guarantee that growth will continue. As a result, the advertising rates that QMS may be able to charge for a digital billboard in the future may not be able to be maintained, resulting in a longer timeframe to recover costs of investment in such boards and sites, and reduced revenues and profitability.

Expansion Strategy

QMS’ strategy also includes growing by obtaining new sites for development. That process involves participating in tenders, responding to requests for proposals as well as dealing with third party landlords and other aggregators of suitable sites. Obtaining those sites depends on the actions of third parties outside of QMS’ control.

There is no guarantee that QMS will be able to obtain such sites, obtain such sites on conditions and rentals acceptable to QMS, or obtain them in a timely manner. Any delay or failure to secure such sites will limit QMS’ ability to increase its revenues and adversely affect its future financial performance.

If QMS is successful in winning tenders and obtaining new sites through other processes it may need to fund the capital requirements for those new sites through equity raisings that would dilute the interests of QMS Shareholders.

8.3.10 Digital platforms, IT risk, privacy and cyber-crimeThe business of QMS depends on the efficient and uninterrupted operation of core IT infrastructure and systems. QMS’ core systems could be exposed to damage or interruption from system failures, computer viruses, cyber-attack, power or telecommunication providers’ failure, fire, natural disasters, terrorist acts, war or human error. These events may cause all or part of QMS’ core systems to become unavailable. Any material interruptions to these systems would adversely impact QMS’ ability to operate and could result in business interruption, the loss of customers and revenue, damaged reputation and weakening of competitive position and could therefore adversely affect QMS’ operating and financial performance.

QMS uses technologies which involve the collection of individual personal information. Through the ordinary course of its business, QMS is potentially exposed to cyber-attacks. Cyber-attacks may lead to compromise or even breach of the technology platforms used by QMS to protect confidential information. It is possible that the measures taken by QMS (including firewalls, encryption of client data, a privacy policy and policies to restrict access to data to authorised employees) will not be sufficient to detect or prevent unauthorised access to, or disclosure of, confidential information, whether malicious or inadvertent.

There is a risk that if a cyber-attack is successful, any data security breaches or QMS’ inadvertent failure to protect confidential information could result in a loss of information integrity, breaches of QMS’ obligations under applicable laws or client agreements, system outages and the hacking of QMS’ digital assets and/or systems, each of which may potentially have a material adverse impact on QMS’ reputation and financial performance.

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8.3.11 Impairment of goodwill and other assetsA substantial proportion of QMS’ total assets consists of goodwill and certain other assets including licences, systems and processes that may become impaired. As required under the Australian Accounting Standards, QMS tests goodwill and certain intangible and other assets annually, and on an interim date if impairment indicators become apparent that would require an interim test of these assets.

At any time, that assessment could result in the view that those assets are impaired and their value revised downwards accordingly. The lower valuation and associated impairment charge could adversely affect QMS’ financial position and profitability.

8.3.12 Fluctuations in the AUD exchange rateQMS expects that over time a greater percentage of its revenues and costs will be denominated in foreign currency as it expands its overseas activities. Fluctuations in the value of currencies may result in volatility in QMS’ revenues, costs and profitability.

8.3.13 Ability to refinance debt or access debt capital marketsQMS has bank and other debt facilities and may not be able to refinance those facilities when they fall due or that the terms (including in relation to pricing) on refinancing will be less favourable than the existing terms.

In addition, QMS may in the future require additional debt in order to fund growth strategies, in particular for acquisition opportunities that may arise from time to time. There is a risk that QMS may be unable to access debt funding on favourable terms, or at all. An inability to access debt funding would materially adversely affect QMS’ growth strategy and future profitability.

8.3.14 Ability to access equity capital marketsFrom time to time, QMS may require additional equity funding, either to pay down debt or for future acquisitions or working capital requirements. There is a risk that QMS may be unable to access equity funding on favourable terms, or at all. Such additional equity funding may dilute QMS Shareholders significantly, while an inability to access equity funding would materially adversely affect QMS’ growth strategy and future profitability.

8.3.15 Interest rate fluctuationsQMS is subject to variability in interest rate movements on its floating debt facility. Adverse fluctuations in interest rates, to the extent that they are not hedged, may impact QMS’ profitability.

8.3.16 Maintenance of professional reputationThe capacity of QMS to attract and retain employees and customers depends to an extent upon the brand and reputation of its business. Any decline in QMS’ brand and reputation may impact the future profitability and financial position of QMS and negatively impact its ability to win new contracts and to maintain relationships with existing customers, as well as affect its ability to attract key employees. If any of these occur, this could materially adversely affect QMS’ business, operating and financial performance.

8.3.17 Acquisition activitiesQMS regularly evaluates acquisition opportunities. The successful implementation of acquisitions depends on a range of factors including funding arrangements, cultural compatibility and operational integration. Integration of new businesses into QMS may be costly or ineffective and fail to deliver expected synergies. There is a risk that QMS’ success and profitability could be adversely affected if future acquisitions are not integrated efficiently and effectively or if acquired technology is not able to be deployed as expected. Possible risks include a delay in the timing of the integration, anticipated benefits and/or synergies are not realised, unanticipated integration costs, and loss of key personnel. These integration issues may adversely impact the profitability of QMS.

8.3.18 InsuranceQMS seeks to maintain appropriate insurances for its business given its industry and operations. Insurances need to be renewed on an annual basis and those renewals may result in insurance premiums increasing with an adverse effect on the expenses and therefore the profitability of QMS. Alternatively, those insurances may not be available on terms which are economic in light of the risks they protect against, resulting in QMS having to self-insure such risks. If such risks ultimately arise they would have an adverse effect on the financial position and performance of QMS.

8.3.19 Inability to pay dividends or make distributionsThe payment of dividends (if any) by QMS will be determined by the QMS Board from time to time at its discretion, and will be dependent upon factors including the profitability, cash flow and future cash needs of QMS’ business at the relevant time. QMS may not be able to pay dividends consistent with past practice or may not be able to pay dividends at all.

SECTION 8 – RISKS

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SECTION 9TAXATION IMPLICATIONS OF THE SCHEME

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9. TAXATION IMPLICATIONS OF THE SCHEME9.1 IntroductionThis Section 9 provides a general overview of the Australian income tax, GST and stamp duty considerations of the Scheme and the Final Dividend for certain QMS Shareholders.

This overview is general in nature and does not attempt to be a complete analysis of the taxation consequences that may arise from the Scheme and the Final Dividend, if declared. QMS Shareholders are advised to seek professional taxation advice to confirm their particular circumstances and outcomes.

This summary is based upon the provisions of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) and the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) as at the date of this Scheme Booklet. We note that the taxation laws are complex in nature and are frequently being changed, both prospectively and retrospectively, and are subject to interpretation by the courts and tax authorities.

This overview applies to General Shareholders who:

a. participate in the Scheme and dispose of their QMS Shares through the Scheme;

b. are either:

i. tax residents for Australian income tax purposes; or

ii. non-residents for Australian income tax purposes and do not hold their QMS Shares in carrying on a business at or through a permanent establishment in Australia; and

c. hold their QMS Shares on capital account for Australian income tax purposes.

This overview will not apply to General Shareholders who:

� hold their QMS Shares on revenue account or for the purposes of short term profit, for speculation, or as part of a business of dealing in securities (e.g. as trading stock);

� hold their QMS Shares under an Employee Share Scheme offered by QMS or otherwise hold QMS performance rights that will vest and automatically convert into QMS shares on the Effective Date where those shares remain subject to deferred taxation under Division 83A of the ITAA 1997;

� may be subject to special taxation rules, such as partnerships, tax exempt organisations, insurance companies, dealers in securities or shareholders who change their tax residency while holding their QMS Shares;

� are subject to the taxation of financial arrangements provisions contained in Division 230 of the ITAA 1997 in relation to the gains and losses on their QMS Shares; or

� are under a legal disability.

QMS will submit a Class Ruling application with the ATO to confirm the Commissioner of Taxation’s views on the specific Australian income tax implications:

� for certain QMS Shareholders for the Final Dividend that may be declared and paid by QMS prior to the implementation of the Scheme; and

� for their disposal of QMS Shares under the Scheme.

The Class Ruling will consider the tax implications for the entire Scheme and will cover the application of the capital gains tax provisions and the general anti-avoidance provisions.

The Scheme is not conditional on the receipt of the Class Ruling.

The Class Ruling has not been issued by the ATO as at the date of this Scheme Booklet. It is not expected to be issued until after the implementation of the Scheme. QMS Shareholders should refer to the Class Ruling once it is published. The Class Ruling will be available on the ATO website.

SECTION 9 – TAXATION IMPLICATIONS OF THE SCHEME

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9.2 Taxation Consequences of the Final Dividend9.2.1 OverviewAs outlined at Section 5.3 of the Scheme Booklet, the QMS Board currently intends to declare a Final Dividend of up to 1.3 cents per QMS Share for the financial year ending 31 December 2019. If the Final Dividend is declared the QMS Board will determine the Final Dividend Record Date and the Final Dividend Payment Date, and the Final Dividend will then be paid on the Final Dividend Payment Date. The payment of the Final Dividend, if any, is independent of the Scheme and will not reduce the Scheme Consideration to be provided pursuant to the Scheme.

General Shareholders will be entitled to receive the Final Dividend (if declared) in respect of the QMS Shares they hold on the Final Dividend Record Date. The Final Dividend is expected to be fully franked.

Under Australian tax law, General Shareholders who receive a fully franked Final Dividend may be entitled to a tax offset equal to the amount of the franking credit attached to the Final Dividend, provided that they are not prevented from claiming the benefit of the franking credit.

Where a General Shareholder is entitled to a tax offset, they may offset or reduce the amount of tax payable on their taxable income.

9.2.2 Australian resident shareholders – individuals, companies and complying superannuation fundsAustralian resident General Shareholders who are individuals, companies or complying superannuation funds:

� should include any Final Dividend in their assessable income in the income year in which the Final Dividend is paid, together with any franking credits attached to that Final Dividend; and

� should (subject to comments below on the 45-day rule) be entitled to a tax offset equal to the franking credits attached to any Final Dividend.

Where the General Shareholder is a company, franked dividends will generally give rise to a franking credit in the company’s franking account.

9.2.3 Australian resident shareholders – trusts and partnershipsAustralian tax resident General Shareholders who are trustees of trusts (other than trustees of complying superannuation funds) or partnerships should include any Final Dividend in the net income of the trust or partnership in the income year in which the Final Dividend is paid, together with any franking credits which are attached to that Final Dividend.

9.2.4 Non-resident shareholdersDividends paid to General Shareholders who are non-residents of Australia for income tax purposes should not be subject to Australian dividend withholding tax to the extent that any Final Dividend has been fully franked.

To the extent that any QMS Final Dividend is unfranked, Australian dividend withholding tax may be imposed and if imposed, will be withheld by QMS on behalf of the QMS Shareholder. In certain circumstances, it may be possible for the rate of Australian dividend withholding tax to be reduced under an applicable Double Taxation Agreement which Australia has with certain countries.

9.2.5 Franking credits – shares held at riskThe benefit of franking credits may be denied where a General Shareholder is not a “Qualified Person” (as described below). If a General Shareholder is not a Qualified Person, then they would not need to include an amount equal to the franking credits attached to any Final Dividend in their assessable income, but would also not be entitled to a tax offset for the amount of any franking credits attached to any Final Dividend.

Broadly, to be a Qualified Person, a shareholder must satisfy the holding period rules. Under these rules, a QMS Shareholder is required to have held their QMS Shares “at risk” for a continuous period of at least 45 days (not including the date of acquisition and the date of disposal of the shares) within the relevant “qualification period”.

This issue will be addressed in the Class Ruling requested by QMS. QMS Shareholders should refer to the Class Ruling once published.


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9.3 Taxation Consequences of Disposal of QMS Shares9.3.1 OverviewThe disposal of the QMS Shares by General Shareholders under the Scheme will constitute a CGT event for Australian income tax purposes. The time of the CGT event will be the time when the QMS Shares are transferred by the QMS Shareholders to BidCo under the Scheme, i.e. on the Scheme Implementation Date.

9.3.2 Australian resident shareholdersBroadly, a General Shareholder will make a capital gain where the capital proceeds they receive from the disposal of their QMS Shares exceeds the cost base of their QMS Shares. Conversely, a General Shareholder will make a capital loss where the capital proceeds they receive from the disposal of their QMS Shares is less than the reduced cost base of their QMS Shares.

General Shareholders who make a capital gain from the disposal of their QMS Shares will be required to include that capital gain in their assessable income for the relevant income year. To the extent the General Shareholders have capital losses from other CGT events, they may be able to offset these against the capital gains made on the disposal of their QMS shares.

General Shareholders who make a capital loss from the disposal of their QMS Shares may be able to use this capital loss to offset other capital gains made in the income year in which the capital loss is realised, or may be able to carry forward the capital loss to offset capital gains derived by the shareholder in future income years.

Capital Proceeds

The capital proceeds for the CGT event arising from the disposal of QMS Shares under the Scheme will consist of the money received, or entitled to be received, by a General Shareholder. Accordingly, the capital proceeds will consist of the Scheme Consideration (being $1.22 per QMS Share) received under the Scheme.

It is not expected that any Final Dividend that may be declared and paid by QMS should constitute capital proceeds for the disposal of the QMS Shares. This issue will be addressed in the Class Ruling being requested from the ATO. General Shareholders should refer to the Class Ruling once published for confirmation of the treatment of any Final Dividend amount.

Cost Base

The cost base and reduced cost base of QMS Shares will generally include the amount paid by the General Shareholder, or the market value of any property given by the General Shareholder, to acquire the QMS Shares, plus any incidental costs of acquisition, such as brokerage. The cost base and reduced cost base of each QMS Share will depend on the particular facts and circumstances of each General Shareholder.

CGT discount

Australian tax resident General Shareholders who are individuals, trusts and complying superannuation funds that have held their QMS Shares for at least 12 months at the time of disposal should be entitled to a CGT discount in calculating the amount of any capital gain they make on disposal of their QMS Shares.

The CGT discount is applied after any available capital losses have been offset to reduce the capital gain.

The applicable CGT discount which would reduce a capital gain arising from the disposal of QMS Shares is 50% for individual shareholders and trusts, or 33 1/3% for complying superannuation fund shareholders. The CGT discount is not available for General Shareholders that are companies.

QMS recommends that General Shareholders seek their own independent advice to confirm how the CGT discount provisions will apply to their particular facts and circumstances as the rules are quite complex.

The application of the CGT provisions will be addressed in the Class Ruling requested by QMS. QMS Shareholders should refer to the Class Ruling once published.


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9.3.3 Non-resident shareholdersFor a General Shareholder who:

� is a non-resident for Australian income tax purposes, or the trustee of a foreign trust for CGT purposes; and

� has not used their QMS Shares at any time in carrying on a business at or through an Australian permanent establishment,

the disposal of their QMS Shares will generally only result in Australian CGT implications if, broadly:

� that General Shareholder, together with their associates, held an interest of 10% or more of the issued share capital of QMS at the time of disposal or for a 12 month period within the two years preceding the disposal (a “non-portfolio interest”); and

� more than 50% of the market value of the assets of QMS is attributable to taxable Australian property. Broadly, taxable Australian property includes both taxable Australian real property (TARP), i.e. land and a lease of land, or a CGT asset that is an indirect Australian real property interest, such as shares in a land rich company.

It is not expected that the QMS Shares held by a General Shareholder that is a non-resident for Australian income tax purposes should constitute an indirect TARP interest. This will be specifically addressed in the Class Ruling.

The foreign resident capital gains withholding regime may impose a 12.5% withholding obligation on transactions involving the acquisition of an asset that is an indirect Australian real property interest. This withholding regime will only apply where the General Shareholder is non-resident for Australian income tax purposes.

This withholding regime is not expected to apply given QMS Shares should not constitute TARP.

9.3.4 Rollover Shareholders Rollover Shareholders are those QMS Shareholders who are entitled to elect to receive some or all of their Scheme Consideration as Scrip Consideration in HoldCo for the disposal of some or all of their QMS Shares.

The Australian income tax legislation allows the deferral of capital gains tax in certain situations. Very broadly, these provisions allow the deferral of tax until the ultimate sale of the shares.

Providing the Rollover Shareholders who dispose of their shares in HoldCo derive a capital gain, they will be eligible to consider whether the other requirements of these rollover provisions are satisfied.

The position of the Rollover Shareholders will be addressed in the Class Ruling requested by QMS. The Rollover Shareholders should refer to the Class Ruling once published.

9.4 GSTThere should be no GST payable in respect of the sale of QMS Shares under the Scheme. Where a QMS Shareholder is not registered or required to be registered for GST, the sale should be outside the scope of GST. Otherwise, the sale of the QMS Shares will be an input taxed financial supply. Where this is the case, QMS Shareholders should obtain independent advice to confirm whether there is any ability to claim any input tax credits for any costs (such as professional advisor fees) incurred in relation to the disposal of their QMS Shares.

9.5 Stamp DutyNo stamp duty should be payable by QMS Shareholders on the disposal of their QMS Shares in connection with the Scheme.

Any stamp duty payable as a result of the transfer of the QMS Shares to BidCo must be paid by BidCo.


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SECTION 10ADDITIONAL INFORMATION

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10. ADDITIONAL INFORMATION10.1 Interests of QMS Directors in QMS securitiesThe table below lists the Relevant Interests of QMS Directors in QMS Shares as at the date of this Scheme Booklet.

QMS Director Position Relevant Interest in QMS Shares

Barclay Nettlefold CEO and Executive Director 46,238,471 QMS Shares

Wayne Stevenson Independent Non-Executive Chairman 1,476,769 QMS Shares

David Edmonds Executive Director 1,062,500 QMS Shares

Robert Alexander Independent Non-Executive Director 48,800 QMS Shares

Anne Parsons Independent Non-Executive Director -

Ian Rowden Independent Non-Executive Director 50,000 QMS Shares

QMS Directors other than Barclay Nettlefold, and entities who are controlled by any of them, who hold QMS Shares, will be entitled to vote at the General Scheme Meeting.

The Nettlefold Rollover Shareholders, who are controlled by Barclay Nettlefold, will be entitled to vote at the Rollover Shareholders Scheme Meeting.

QMS Directors, or the entities controlled by them, who hold QMS Shares on the Scheme Record Date will receive the Scheme Consideration along with the other Scheme Shareholders.

Each QMS Director other than Barclay Nettlefold intends to vote, or cause to be voted, all QMS Shares held or controlled by them in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of QMS Shareholders. Under his Voting and Rollover Agreement, Barclay Nettlefold has unconditionally agreed to vote all the QMS Shares held or controlled by him in favour of the Scheme as long as that agreement remains operative.

The table below lists the Relevant Interests of QMS Directors in QMS Performance Rights as at the date of this Scheme Booklet.

QMS Director Position Relevant Interest in QMS Performance Rights

Barclay Nettlefold CEO and Executive Director 927,098 QMS Performance Rights*

David Edmonds Executive Director 453,591 QMS Performance Rights**

* 592,463 of Barclay Nettlefold’s QMS Performance Rights will vest and become Scheme Shares for which he will receive Scheme Consideration if the Scheme is implemented. The remaining 334,635 QMS Performance Rights will be cancelled along with 327,315 QMS Performance Rights which were offered to him subject to QMS Shareholder approval.

** 287,569 of David Edmonds’ QMS Performance Rights will vest and become Scheme Shares for which he will receive Scheme Consideration if the Scheme is implemented. The remaining 166,022 QMS Performance Rights will be cancelled along with 154,306 QMS Performance Rights which were offered to him subject to QMS Shareholder approval.

Please refer to Section 10.8 for details regarding the treatment of QMS Performance Rights if the Scheme becomes Effective.

10.2 Marketable securities in a Quadrant Group Member held by, or on behalf of, QMS DirectorsNo marketable securities of a Quadrant Group Member are held by, or on behalf of, QMS Directors as at the date of this Scheme Booklet.

SECTION 10 – ADDITIONAL INFORMATION

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10.3 Payments and other benefits to directors, secretaries or executive officers of QMS in connection with retirement or loss of officeExcept as set out in Section 10.8.2 below, no payment or other benefit is proposed to be made or given to a director, secretary or executive officer of QMS or any QMS Group Member as compensation for loss of, or as consideration for or in connection with their retirement from, office in QMS or any QMS Group Member as a result of the Scheme.

10.4 Interests of QMS Directors in contracts of BidCoNo QMS Director has an interest in any contract entered into by BidCo, other than Barclay Nettlefold.

Barclay Nettlefold and the Nettlefold Rollover Shareholders are parties to a voting and rollover agreement with BidCo entered into on 29 October 2019 (Nettlefold Rollover Agreement).

Under the Nettlefold Rollover Agreement, Barclay Nettlefold and the Nettlefold Rollover Shareholders agreed to be bound by no-shop, no-talk, no due diligence and notification exclusivity provisions similar to those agreed to by QMS under the Scheme Implementation Deed (summarised in Section 5.5.3 above) (the Nettlefold Exclusivity Provisions). However, unlike the Scheme Implementation Deed, the no-talk and no due diligence provisions under the Nettlefold Rollover Agreement are not subject to a fiduciary carve out.

They also agreed not to:

a. dispose of their relevant interests in QMS Shares;

b. acquire relevant interests in QMS Shares (other than in connection with the vesting of any QMS Performance Rights held by Barclay Nettlefold);

c. enter into certain derivatives of other arrangements under which payments may be made that are referable to the trading price or economic value of QMS Shares;

d. aid, abet, counsel, assist or facilitate or induce any other person in doing, or publicly announce that they will do any of the things mentioned in paragraphs 10.4(a) to (c) above;

(paragraphs (a) to (d) together, the Nettlefold Standstill Provisions)

e. become involved in a Competing Proposal;

f. accept in respect of, sell or agree to sell any of their QMS Shares to a third party proposing a Competing Proposal;

g. vote in favour of a Competing Proposal; or

h. make any announcement that they will accept or propose to accept, vote in favour or otherwise support a Competing Proposal.

The Nettlefold Rollover Agreement also obliges the Nettlefold Rollover Shareholders to:

a. vote in favour of the Scheme to effect the Transaction; and

b. elect to receive, pursuant to the Scheme:

i. Scrip Consideration in respect of such percentage of their QMS Shares as represents $40 million in value (in the aggregate between them); and

ii. Cash Consideration in respect of the remainder of their QMS Shares,

and not revoke such election.

The Nettlefold Rollover Agreement will terminate at the earlier of:

a. Implementation of the Scheme;

b. 29 October 2020; and

c. provided that the Nettlefold Rollover Shareholders have complied with the Nettlefold Exclusivity Provisions and the Nettlefold Standstill Provisions and QMS has complied with the QMS Exclusivity Provisions, the QMS Directors recommending a Superior Proposal in accordance with clause 6.3 of the Scheme Implementation Deed.


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The termination of the Scheme Implementation Deed will not necessarily result in the termination of the Nettlefold Rollover Agreement and Barclay Nettlefold and the Nettlefold Rollover Shareholders may continue to be bound by the restrictions in that agreement notwithstanding that the Scheme Implementation Deed has terminated. Equally, the termination of the Nettlefold Rollover Agreement will not necessarily result in the termination of the Scheme Implementation Deed.

10.5 Other agreements or arrangements with QMS Directors relating to the SchemeOther than as noted in Section 10.4 above, no QMS Director has any other interest, whether as a director, member or creditor of a Quadrant Group Member or otherwise, which is material to the Scheme, other than in their capacity as a holder of QMS Shares or, in the case of Barclay Nettlefold and David Edmonds, as a holder of QMS Performance Rights.

10.6 Suspension of trading of QMS SharesIf the Court approves the Scheme, QMS will notify ASX. It is expected that suspension of trading on ASX in QMS Shares will occur from close of trading on the Effective Date. This is expected to occur on Tuesday, 11 February 2020.

10.7 Deed PollBidCo and HoldCo have executed the Deed Poll pursuant to which they have undertaken in favour of each Scheme Shareholder to procure that each Scheme Shareholder is provided the Scheme Consideration to which they are entitled under the Scheme, in accordance with the terms of the Scheme and subject to the Scheme becoming Effective.

A copy of the Deed Poll is contained in Annexure C.

10.8 QMS Performance Rights10.8.1 QMS Performance Rights on issueThere are 8,055,254 QMS Performance Rights issued by the QMS Board and outstanding. A further 481,621 QMS Performance Rights have been offered but are yet to be issued as they are subject to QMS Shareholder approval.

10.8.2 Intended treatment of QMS Performance Rights in connection with the SchemeUnder rule 27 of QMS LTIP rules, in the event of a proposed change of control of QMS, the QMS Board has discretion to determine the treatment of any unvested QMS Performance Rights.

The QMS Board (in the absences of Barclay Nettlefold and David Edmonds) has exercised its discretion and has determined to vest 5,235,835 of the QMS Performance Rights on issue and outstanding, and cancel the remainder, on the Scheme Record Date, subject to the Scheme becoming Effective.

Of the 5,235,835 QMS Performance Rights being vested in the exercise of the QMS Board’s discretion, 592,463 will vest for Barclay Nettlefold and 287,569 will vest for David Edmonds.

334,635 QMS Performance Rights issued to Barclay Nettlefold will be cancelled along with 327,315 QMS Performance Rights which were offered to him subject to QMS Shareholder approval.

166,022 QMS Performance Rights issued to David Edmonds will be cancelled along with 154,306 QMS Performance Rights which were offered to him subject to QMS Shareholder approval.

The vesting of the QMS Performance Rights as a result of the exercise of the QMS Board’s discretion, and corresponding issue of 5,235,835 QMS Shares to their holders, has no impact on the Scheme Consideration payable to Scheme Shareholders.

The 5,235,835 QMS Shares to be issued to QMS Performance Rights holders will be issued after the Scheme Meetings and will not be voted at either Scheme Meeting.

The 5,235,835 QMS Shares will form part of the Scheme Shares and the holders of them will be entitled to receive the Scheme Consideration under the Scheme for them, provided that they are held by them as at the Scheme Record Date.

Holders of those QMS Shares will be entitled to receive the Final Dividend (if declared) for them, provided that they are held by them as at the Final Dividend Record Date.


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10.9 ASIC ReliefThe Corporations Regulations require the explanatory statement for a scheme of arrangement to set out whether, within the knowledge of the directors of QMS, the financial position of QMS has materially changed since the date of the last balance sheet laid before QMS in general meeting or sent to shareholders in accordance with sections 314 or 317 of the Corporations Act, and if so, full particulars of the changes.

ASIC has granted QMS relief from this requirement so that this Scheme Booklet only need set out, within the knowledge of the QMS Directors, whether the financial position of QMS has not materially changed since 30 June 2019 (being the last date of the period to which the financial statements for the half-year ended 30 June 2019 relate).

See Section 6.10 for this disclosure.

10.10 Consents and disclosuresThe following parties have given, and have not withdrawn before the date of this Scheme Booklet, their consent to be named in this Scheme Booklet in the form and context in which they are named:

a. CLSA as financial adviser to QMS;

b. Computershare as the manager of the QMS Share Register; and

c. Lander & Rogers as legal adviser to QMS in relation to the Scheme.

The Independent Expert has given and has not withdrawn its consent to be named in this Scheme Booklet and to the inclusion of the Independent Expert’s Report in Annexure A to this Scheme Booklet and to the references to the Independent Expert’s Report in this Scheme Booklet being made in the form and context in which each such reference is included.

KPMG has given, and has not withdrawn, its consent to be named in the Scheme Booklet and to the inclusion of Section 9 (Taxation Implications of the Scheme) in the form and context in which it appears.

BidCo has given, and has not withdrawn, its consent to be named in this Scheme Booklet and in relation to the inclusion of the Quadrant Information in this Scheme Booklet in the form and context in which that information is included.

Each person named in this Section 10.10:

a. has not authorised or caused the issue of this Scheme Booklet;

b. does not make, or purport to make, any statement in this Scheme Booklet or any statement on which a statement in this Scheme Booklet is based, other than as specified in this Section 10.10; and

c. to the maximum extent permitted by law, expressly disclaims all liability in respect of, makes no representation regarding, and takes no responsibility for, any part of this Scheme Booklet, other than a reference to its name and the statement (if any) included in this Scheme Booklet with the consent of that party as specified in this Section 10.10.

10.11 No unacceptable circumstancesThe QMS Directors believe that the Scheme does not involve any circumstances in relation to the affairs of QMS that could reasonably be characterised as constituting ‘unacceptable circumstances’ for the purposes of section 657A of the Corporations Act.

10.12 No other information material to the making of a decision in relation to the SchemeOtherwise than as contained or referred to in this Scheme Booklet, including the Independent Expert’s Report and the information that is contained in the Annexures to this Scheme Booklet, there is no other information that is material to the making of a decision by a QMS Shareholder whether or not to vote in favour of the Scheme Resolution to approve the Scheme, being information that is known to any QMS Director and which has not previously been disclosed to QMS Shareholders.


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10.13 Supplementary informationIf QMS becomes aware of any of the following between the date of lodgement of this Scheme Booklet for registration with ASIC and the Court Approval Date:

a. a material statement in this Scheme Booklet is false or misleading;

b. a material omission from this Scheme Booklet;

c. a significant change affecting a matter in this Scheme Booklet; or

d. a significant new matter has arisen and it would have been required to be included in this Scheme Booklet if known about at the date of lodgement with ASIC,

depending on the nature and timing of the changed circumstances, and subject to obtaining any relevant approvals, QMS may circulate and publish any supplementary document by:

e. making an announcement to ASX;

f. placing an advertisement in a prominently published newspaper which is circulated generally throughout Australia;

g. posting the supplementary document to QMS Shareholders at their registered address as shown in the QMS Share Register; and/or

h. posting a statement on QMS’ website at https://www.qmsmedia.com/investors/investor-services/,

as QMS in its absolute discretion considers appropriate.

10.14 Transaction costsQMS estimates that it will incur approximately $7,500,000 (plus GST) in external transaction costs related to the Scheme, which includes advisory fees, legal fees, valuation fees, Court fees and registry, printing and mailing costs.

Of this, approximately $1,100,000 (plus GST) will be incurred regardless of whether the Scheme becomes Effective or not, including Independent Expert’s fees of $200,000 plus GST.

10.15 Confidentiality DeedQMS and QPE Investment Pty Ltd entered into the Confidentiality Deed before the Scheme Implementation Deed and the final binding offer made by Quadrant Private Equity. The Confidentiality Deed was entered into to allow Quadrant Private Equity to undertake due diligence on an exclusive basis.

During that time, QMS did not want Quadrant Private Equity building a stake in QMS unless it was going to provide a final binding offer which the QMS Board was willing to accept. To do otherwise would have potentially allowed Quadrant Private Equity to build a blocking stake which could have an adverse effect on other offers being made for QMS.

Accordingly, the QMS Board required Quadrant to agree to a standstill under the Confidentiality Agreement under which certain entities associated with Quadrant Private Equity would not acquire QMS Shares or rights to acquire QMS Shares (Standstill Provision).

The Standstill Provision will expire on 11 September 2020, being the date that is 12 months from the execution of the Confidentiality Deed.

The inclusion of a Standstill Provision in a confidentiality agreement relating to a party conducting exclusive due diligence is not an unusual arrangement in acquisition deals.

The QMS Board does not expect the Standstill Provision to have an adverse impact on Competing Proposals or prevent Quadrant Private Equity from making an alternative proposal in the future.


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SECTION 11GLOSSARY & INTERPRETATION

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11. GLOSSARY AND INTERPRETATION 11.1 GlossaryThe meanings of the terms used in this Scheme Booklet are set out below.

Term Meaning Adviser any person who is engaged to provide professional advice of any type (including legal,

accounting, consulting or financial advice) to QMS or BidCo

ASIC Australian Securities and Investments Commission

ASX ASX Limited (ABN 98 008 624 691) or, if the context requires, the financial market operated by it

ATO Australian Taxation Office

Authorised Person in respect of a person:

a. a director, officer, contractor, agent or employee of the person;

b. an Adviser of the person; and

c. a director, officer or employee of an Adviser of the person

BidCo Shelley BidCo Pty Ltd (ACN 634 292 881)

BidCo Warranties the representations and warranties of BidCo as set out in clause 9.1 of the Scheme Implementation Deed

Break Fee $4.2 million. The circumstances in which the Break Fee may become payable are summarised in Section 5.5.5

Business Day a day that is not a Saturday, Sunday or a public holiday or bank holiday in Melbourne, Victoria

Cash Consideration $1.22 cash for each QMS Share held by a Scheme Shareholder as at the Scheme Record Date

COC Consents the consents and confirmation required under clause 3.1(l) of the Scheme Implementation Deed for the COC Contracts

COC Contracts those contracts each of which individually are reasonably expected to contribute at least $10,000,000 of the QMS Group’s revenue for the financial year ending 31 December 2019

Competing Proposal has the meaning given to the term “Competing Proposal” in the Scheme Implementation Deed

Conditions Precedent each of the conditions set out in clause 3.1 of the Scheme Implementation Deed and clause 3.1 of the Scheme

Confidentiality Deed has the meaning given in Section 7.9.1

Control has the meaning given in section 50AA of the Corporations Act

Corporations Act the Corporations Act 2001 (Cth) as amended

Corporations Regulations

the Corporations Regulations 2001 (Cth) as amended

Court the Federal Court of Australia (Victorian registry)

Court Approval Date the date when the Court grants its approval to the Scheme under section 411(4) of the Corporations Act. This date is currently proposed to be Monday, 10 February 2020

Debt Funding has the meaning given in Section 6.5.1

Delivery Time in relation to the Second Court Date, 2 hours before the commencement of the hearing or if the commencement of the hearing is adjourned, the commencement of the adjourned hearing, of the court to approve the Scheme in accordance with section 411(4)(b) of the Corporations Act

EBITDA earnings before interest, tax, depreciation and amortisation

Effective the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to the Scheme

Effective Date the date on which the Scheme becomes Effective. This date is currently proposed to be Tuesday, 11 February 2020

SECTION 11 – GLOSSARY AND INTERPRETATION

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Term Meaning Election an election by a Rollover Shareholder to receive some or all of their Scheme Consideration in

the form of Scrip Consideration and the remainder in the form of Cash Consideration made in accordance with clause 5.2 of the Scheme

Election Form a form issued by or on behalf of QMS for the purposes of a Rollover Shareholder making an Election in a form agreed to by QMS and BidCo

End Date the later of:

a. 30 April 2020; and

b. such other date and time agreed in writing between BidCo and QMS

Equity Funding has the meaning given in Section 7.5.1

EV enterprise value

Exclusivity Period the period commencing on the date of the Scheme Implementation Deed and ending on the earliest of:

a. the End Date;

b. the Effective Date; and

c. the date the Scheme Implementation Deed is terminated in accordance with its terms

FATA Foreign Acquisitions and Takeovers Act 1975 (Cth)

Final Dividend has the meaning given in Section 5.3

Final Dividend Payment Date

a date to be determined and announced by the QMS Board

Final Dividend Record Date

7.00pm on a date to be determined and announced by the QMS Board

FIRB the Australian Foreign Investment Review Board

General Scheme Meeting

the meeting of the General Shareholders ordered by the Court to be convened under section 411(1) of the Corporations Act to consider and vote on the Scheme and includes any meetings convened following any adjournment or postponement of that meeting

General Scheme Resolution

the resolution to approve the Scheme to be voted on at the General Scheme Meeting, the form of which is set out in the Notice of General Scheme Meeting in Annexure D

General Shareholders

each QMS Shareholder other than the Rollover Shareholders

Government Agency any government or representative of a government or any governmental, semi-governmental, administrative, fiscal, regulatory or judicial body, department, commission, authority, tribunal, agency, competition authority or entity and includes any minister, ASIC, ASX, the Takeovers Panel and any regulatory organisation established under statute or any stock exchange

HoldCo Shelley Topco Pty Ltd (ACN 634 291 375), the ultimate holding company of BidCo

HoldCo Constitution the constitution of HoldCo

HoldCo Shareholders’ Agreement

the shareholders’ agreement in respect of HoldCo

HoldCo Shares shares (including ordinary shares and preference shares) in the capital of HoldCo and HoldCo Share means any one of them

Implementation Date the fifth Business Day, or such other Business Day as BidCo and QMS agree, following the Scheme Record Date for the Scheme. This date is currently proposed to be Friday, 21 February 2020

Independent Expert Lonergan Edwards & Associates Limited (ABN 53 095 445 560)

Independent Expert’s Report

the report prepared by the Independent Expert dated 11 December 2019 set out in Annexure A

KPMG KPMG, an Australian Partnership (ABN 51 194 660 183)

Listing Rules the official listing rules of ASX as amended from time to time


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Term Meaning MediaWorks MediaWorks Investments Limited (NZCN 4568880), in which the QMS Group holds 40% of the

shares on issue

MediaWorks Group MediaWorks and its Subsidiaries

MidCo 1 Shelley MidCo 1 Pty Ltd (ACN 634 291 866)

MidCo 2 Shelley MidCo 2 Pty Ltd (ACN 634 292 229)

Nettlefold Rollover Agreement

has the meaning given in Section 10.4

Nettlefold Rollover Shareholders

Barctin Superannuation Pty Ltd as trustee of Barctin Superannuation Fund and Wenvale Pty Ltd as trustee for the Barclay Nettlefold Family Trust (being entities controlled by Barclay Nettlefold) and a reference to a Nettlefold Rollover Shareholder is to any one of them

Non-Public Information

any non-public information in relation to the QMS Group

Notice of General Scheme Meeting

the notice of meeting relating to the General Scheme Meeting which is contained in Annexure D

Notice of Rollover Shareholders Scheme Meeting

the notice of meeting relating to the Rollover Shareholders Scheme Meeting which is contained in Annexure E

Notices the Notice of General Scheme Meeting and the Notice of Rollover Shareholders Scheme Meeting

NZ OIO the New Zealand Overseas Investment Office, which administers New Zealand’s overseas investment laws

OOH has the meaning given in the Chairman’s Letter

Proxy Form the proxy form for the Scheme Meetings which accompanies this Scheme Booklet, or, as the context requires, any replacement or substitute proxy form provided by or on behalf of QMS

QMS QMS Media Limited (ACN 603 037 341)

QMS Board or Board the board of directors of QMS (or any committee of the board of directors of QMS constituted to consider the Transaction on behalf of QMS)

QMS Director a member of the QMS Board

QMS Exclusivity Provisions

the provisions set out in clause 11 of the Scheme Implementation Deed

QMS Group QMS and each of its Subsidiaries and a reference to a QMS Group Member is to QMS or any of its Subsidiaries

QMS Information the information contained in this Scheme Booklet, other than the Quadrant Information, the information contained in Annexure A (except the information provided by QMS to the Independent Expert) and the information contained in Section 9 (Taxation Implications)

QMS LTIP QMS’ long term incentive plan adopted with effect from 30 June 2017

QMS Material Adverse Change

has the meaning given to the term “Material Adverse Change” in the Scheme Implementation Deed

QMS Performance Rights

performance rights issued under the QMS LTIP

QMS Prescribed Occurence

has the meaning given to the term “Prescribed Occurence” in the Scheme Implementation Deed

QMS Regulated Event

has the meaning given to the term “Regulated Event” in the Scheme Implementation Deed

QMS Share a fully paid ordinary share in the capital of QMS

QMS Share Register the register of members of QMS maintained by or on behalf of QMS in accordance with section 168(1) of the Corporations Act

QMS Shareholder each person who is registered in the QMS Share Register as a holder of QMS Shares


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Term Meaning QMS Shareholder Information Line

1300 069 339 from within Australia and +61 3 9415 4275 from outside Australia

QMS Warranties the representations and warranties of QMS set out in clause 9.2 of the Scheme Implementation Deed

Quadrant Fund Entities

has the meaning given in Section 7.2

Quadrant Funds has the meaning given in Section 7.2

Quadrant Group BidCo, MidCo 1, MidCo 2, HoldCo and each of their Subsidiaries from time to time, excluding QMS and its Subsidiaries to the extent they are Subsidiaries of those entities, and a reference to a Quadrant Group Member is to any one of them

Quadrant Information

a. statements relating to the Quadrant Group or BidCo in the Responsibility statement and Disclaimer as to forward-looking statements sections of the Important Notices at the beginning of the Scheme Booklet; and

b. the information contained in:

i. the answer to the question “Who are BidCo, HoldCo and Quadrant Private Equity?” in Section 4; and

ii. Section 7

Quadrant Private Equity

the private equity firm known as “Quadrant Private Equity”

Recommendation the recommendation of each QMS Director in respect of the Scheme that QMS Shareholders vote in favour of the Scheme, subject to no Superior Proposal emerging and the Independent Expert concluding in the Independent Expert’s Report (and continuing to conclude) that the Scheme is in the best interests of QMS Shareholders

Related Bodies Corporate

has the meaning set out in section 50 of the Corporations Act

Relevant Interest has the meaning given in sections 608 and 609 of the Corporations Act

Requisite Majorities has the meaning given in Section 5.4.1

Rollover Principals Barclay Nettlefold and John O’Neill

Rollover Shareholders

the Nettlefold Rollover Shareholders and John O’Neill Pty Ltd as trustee for the O’Neill Pastoral Discretionary Trust, and Rollover Shareholder means any one of them

Rollover Shareholders Scheme Meeting

the meeting of Rollover Shareholders ordered by the Court to be convened under section 411(1) of the Corporations Act to consider and vote on the Scheme and includes any meetings convened following any adjournment or postponement of that meeting

Rollover Shareholders Scheme Resolution

the resolution to approve the Scheme to be voted on at the Rollover Scheme Meeting, the form of which is set out in the Notice of Rollover Shareholders Scheme Meeting in Annexure E

Scheme or Scheme of Arrangement

the scheme of arrangement under Part 5.1 of the Corporations Act between QMS and the Scheme Shareholders, the form of which is attached in Annexure B, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to in writing by BidCo and QMS

Scheme Announcement Date

the date on which the Scheme was announced on the ASX, being 29 October 2019

Scheme Booklet this document

Scheme Consideration

the Cash Consideration, or, where the context requires in relation to a Rollover Shareholder, the Cash Consideration together with any Scrip Consideration, payable per Scheme Share held by a Scheme Shareholder determined in accordance with clause 4.5 of the Scheme Implementation Deed

Scheme Implementation Deed

the Scheme Implementation Deed dated 29 October 2019 between BidCo and QMS relating to (among other things) the implementation of the Scheme. A summary is set out in Section 5, and a full copy can be obtained from QMS’ website at https://www.qmsmedia.com/investors/investor-services/


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Term Meaning Scheme Meetings both of the General Scheme Meeting and the Rollover Shareholders Scheme Meeting, and

Scheme Meeting means either or both of them (as the context requires)

Scheme Record Date 5.00pm on the third Business Day (or such other Business Day as BidCo and QMS agree in writing) after the Effective Date. This date is currently proposed to be Friday, 14 February 2020

Scheme Resolutions the General Scheme Resolution and the Rollover Scheme Resolution and Scheme Resolution means either of them (as the context requires)

Scheme Shareholder a holder of QMS Shares recorded in the QMS Share Register as at the Scheme Record Date

Scheme Shares all QMS Shares held by the Scheme Shareholders as at the Scheme Record Date

Scrip Consideration has the meaning given in the Chairman’s Letter

Second Court Date the first day on which an application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving the Scheme is heard, or if the application is adjourned or subject to appeal for any reason, the first day on which the adjourned application is heard or scheduled to be heard. This date is currently proposed to be Monday, 10 February 2020

Second Court Hearing

the hearing of the application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving the Scheme

Section a section of the Scheme Booklet

Share Registry or Computershare

Computershare Investor Services Pty Limited (ACN 078 279 277)

Specified Time 8.00am on the Second Court Date

Subsidiary has the meaning given in Division 6 of Part 1.2 of the Corporations Act

Superior Proposal a bona fide Competing Proposal which the QMS Board determines, acting in good faith and in order to satisfy what the QMS Board reasonably considers to be its fiduciary or statutory duties, would, if completed substantially in accordance with its terms, be likely to result in a transaction more favourable to QMS Shareholders as a whole than the Transaction, having regard to matters including, but not limited to, the type of consideration offered, the actual or implied premium of the purchase price, conditionality, funding, certainty and timing

Transaction the acquisition of all the Scheme Shares by BidCo through the implementation of the Scheme

Undisturbed Share Price Date

has the meaning given in the Chairman’s Letter

Voting and Rollover Agreements

the voting and rollover agreement between BidCo, Barclay Nettlefold and the Nettlefold Rollover Shareholders and the voting and rollover agreement between BidCo, John O’Neill and John O’Neill Pty Ltd as trustee for the O’Neill Pastoral Discretionary Trust, each dated 29 October 2019 and Voting and Rollover Agreement means any one of them

Voting Intention the intention of each QMS Director to vote, or cause to be voted, all QMS Shares that he or she holds or controls in favour of the Scheme, subject to no Superior Proposal emerging and the Independent Expert concluding in the Independent Expert’s Report (and continuing to conclude) that the Scheme is in the best interests of QMS Shareholders

VWAP volume weighted average price

11.2 Interpretation In this Scheme Booklet:

a. words of any gender include all genders;

b. words importing the singular include the plural and vice versa;

c. an expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa;

d. a reference to an Annexure is a reference to an annexure of this Scheme Booklet as relevant;

e. a reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them;


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f. headings and bold type are for convenience only and do not affect the interpretation of this Scheme Booklet;

g. a reference to time is a reference to Melbourne, Australia time unless otherwise specified;

h. a reference to dollars and $ is to Australian currency;

i. an accounting term is a reference to that term as it is used in accounting standards under the Corporations Act, or, if not inconsistent with those standards, in accounting principles and practices generally accepted in Australia; and

j. the words “include”, “including”, “for example” or “such as” when introducing an example, do not limit the meaning of the words to which the example relates to that example or examples of a similar kind.


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ANNEXURE A – INDEPENDENT EXPERT’S REPORT QMS MEDIA LIMITED | SCHEME BOOKLET 89

ANNEXURE AINDEPENDENT EXPERT’S REPORT

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ANNEXURE A – INDEPENDENT EXPERT’S REPORTQMS MEDIA LIMITED | SCHEME BOOKLET90

1

The Directors QMS Media Limited 214 Park Street South Melbourne VIC 3205 11 December 2019 Subject: Proposed acquisition of QMS Media Limited by way of Scheme Dear Directors

Introduction 1 On 29 October 2019, QMS Media Limited (QMS or the Company) announced that it and

Shelley BidCo Pty Ltd (BidCo or the Bidder), an entity controlled by Quadrant Private Equity and its institutional partners (together, Quadrant) had signed a Scheme Implementation Deed (the Agreement) pursuant to which BidCo will acquire all the fully paid ordinary shares in QMS.

2 The proposed acquisition of the shares is to be implemented via a scheme of arrangement between QMS and its shareholders (the Scheme) and is subject to a number of conditions precedent (as summarised in Section I of our report).

3 If the Scheme is approved and implemented:

(a) QMS Shareholders – QMS shareholders, excluding the entities associated with Mr Barclay Nettlefold (Mr Nettlefold) and Mr John O’Neill (Mr O’Neill), will receive $1.22 cash (Cash Scheme Consideration) for each QMS share they hold on the Scheme Record Date (14 February 2020)

(b) Rollover Shareholders – entities associated with Mr Nettlefold and Mr O’Neill (which collectively hold 14.9% of QMS’s ordinary shares on issue) will receive a mix of Cash Scheme Consideration and shares in the ultimate holding company of BidCo (HoldCo) (Scrip Consideration)1, for the QMS shares they hold on the Scheme Record Date (14 February 2020)2.

1 Rollover Shareholders will receive 75.0% of their HoldCo shares as ordinary shares with the remaining 25.0%

being preference shares (collectively, the “HoldCo Shares”). 2 The Rollover Shareholders have entered into binding contractual commitments, in favour of BidCo, to elect to

receive the Cash Scheme Consideration and the Scrip Consideration in prescribed proportions (Mr Nettlefold and entities associated with him are required to elect to receive the Scrip Consideration in respect of 70.9% of their QMS shares (excluding performance rights) and Mr O’Neill and entities associated with him are required to elect the Scrip Consideration in respect of 49.6% of their QMS shares (excluding performance rights)).

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4 Subject to QMS Board approval, QMS shareholders will also be entitled to receive a final dividend of up to 1.3 cents per QMS share for the financial year ending 31 December 2019 (Final Dividend), if they hold QMS shares on the record date for that dividend. The payment of the Final Dividend will not alter the consideration payable under the Scheme.

5 As the Rollover Shareholders are being offered a form of consideration under the Scheme which is different to the consideration offered to the QMS Shareholders, they will constitute a separate class of members for the purposes of the voting on the Scheme. Accordingly, QMS will request that the court convene separate Scheme meetings (which are collectively referred to as the “Scheme Meetings”), being:

(a) the Scheme Meeting of QMS Shareholders generally, excluding the Rollover Shareholders (General Scheme Meeting)

(b) the Scheme Meeting of the Rollover Shareholders only (Rollover Shareholders Scheme Meeting).

6 Under the Corporations Act 2001 (Cth) (Corporations Act) , the Scheme is approved if the resolutions approving the Scheme are passed by:

(a) a majority in number (more than 50%) of the QMS Shareholders present and voting at the General Scheme Meeting (in person or by proxy), and by 75% of the votes cast on the resolution at that meeting

(b) a majority in number of the Rollover Shareholders present and voting at the Rollover Shareholders Scheme Meeting (in person or by proxy), and by 75% of the votes cast on the resolution at that meeting (noting that Mr Nettlefold and Mr O’Neill are required, by contractual commitments with BidCo, to vote in favour of the Scheme in the absence of a superior proposal which is recommended by the QMS Directors).

7 If the resolutions are passed by the requisite majorities, and the other conditions of Scheme are satisfied or waived, a second Court hearing will be held to approve the Scheme which, if approved, will become binding on all QMS shareholders who hold QMS shares as at the Scheme Record Date, whether or not they voted for the Scheme (and even if they voted against the Scheme).

QMS 8 QMS is a leading provider of out-of-home advertising and media services across a portfolio of

owned and represented digital and static billboards, street furniture, sport, airport and transit media across Australia, New Zealand (NZ) and overseas markets. The Company operates across two business segments, QMS Australia and QMS Sport, and holds a 40% equity interest in Mediaworks New Zealand (MediaWorks). QMS is headquartered in Melbourne and employs over 520 staff which operate from 31 locations throughout Australia, NZ, Europe, North America and South America.

Quadrant 9 Quadrant is one of Australia’s largest independent private equity firms, managing and

advising more than $4.6 billion in private equity capital. Quadrant invests in management buyouts, management buy-ins and growth capital opportunities in Australia and NZ.

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Purpose of report 10 Whilst there is no legal requirement under the Corporations Act or the Corporations

Regulations 2001 (Corporations Regulations) for QMS to obtain an independent expert’s report (IER), it is a condition precedent to the Scheme as well as a qualification to the QMS Directors’ recommendation of the Scheme that an independent expert concludes (and continues to conclude) that the Scheme is in the best interests of QMS shareholders (except as noted below in paragraph 12).

11 Accordingly, the Directors of QMS have requested that Lonergan Edwards & Associates Limited (LEA) prepare an IER stating whether, in our opinion, the Scheme is fair and reasonable and in the best interests of QMS Shareholders and the reasons for that opinion.

12 For the avoidance of doubt, this IER is limited to an assessment of the merits of the Scheme from the perspective of QMS Shareholders only (i.e. QMS shareholders generally, except for the Rollover Shareholders). We have not separately opined on whether the Scheme is fair and reasonable and in the best interests of the Rollover Shareholders, because:

(a) subject only to the emergence of a superior proposal that is recommended by the QMS Directors, each of the Rollover Shareholders has already made a binding contractual commitment in favour of BidCo to: (i) vote in favour of the Scheme; and (ii) receive the Cash Scheme Consideration and the Scrip Consideration in prescribed

proportions3. Accordingly, in LEA’s view, the Rollover Shareholders have already formed their decision as to the merits of the Scheme as it applies to them

(b) the Rollover Shareholders are sophisticated or professional investors and are associated with members of QMS’s senior management team (i.e. Mr Nettlefold and Mr O’Neill, each of whom has extensive knowledge and understanding of the QMS business)

(c) the merits of the Cash Scheme Consideration are already assessed within this IER; and (d) being sophisticated or professional investors, we consider the Rollover Shareholders to

be capable of forming their own view as to the extent to which they have agreed to accept the Scrip Consideration (over the Cash Scheme Consideration).

13 LEA is independent of QMS, Quadrant and the Rollover Shareholders and has no other involvement or interest in the proposed Scheme.

Summary of opinion 14 In our opinion, the Scheme is fair and reasonable and in the best interests of QMS

Shareholders in the absence of a superior proposal. We have formed this opinion for the reasons set out below.

3 Mr Nettlefold and entities associated with him are contractually required to elect to receive the Scrip Consideration

in respect of 70.9% of their QMS shares (excluding performance rights) and Mr O’Neill and entities associated with him are contractually required to elect the Scrip Consideration in respect of 49.6% of their QMS shares (excluding performance rights).

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Value of QMS 15 We have assessed the value of QMS shares on a 100% controlling interest basis at $1.12 to

$1.29 per share, as shown below:

QMS – valuation summary(1)

Paragraph Low $m

High $m

QMS Australia 188 441.0 490.0 QMS Sport 199 108.0 117.0 Investment in MediaWorks 220 71.4 78.8 Corporate costs 224 (57.4) (63.4) Value of core business 563.0 622.4 Other assets / (liabilities) 225 (24.0) (24.0) Net cash / (debt) 227 (148.0) (148.0) Equity value – controlling interest basis 391.1 450.5 Fully diluted shares on issue (million) 230 350.0 350.0 QMS value per share – controlling interest basis ($) 1.12 1.29 Note: 1 Rounding differences may exist.

Fair and reasonable opinion 16 Pursuant to the Australian Securities & Investments Commission (ASIC) Regulatory

Guide 111 – Content of expert reports (RG 111) a scheme is “fair” if the value of the Scheme Consideration is equal to or greater than the value of the securities the subject of the Scheme. This comparison is shown below:

Position of QMS Shareholders

Low

$ per share High

$ per share Mid-point $ per share

Value of Cash Scheme Consideration 1.22 1.22 1.22 Value of 100% of QMS 1.12 1.29 1.21 Extent to which the Cash Scheme Consideration exceeds (or is less than) the value of QMS 0.10 (0.07) 0.01

17 As the Cash Scheme Consideration lies within our assessed valuation range for QMS shares

on a 100% controlling interest basis, in our opinion, the Scheme Consideration is fair to QMS Shareholders when assessed based on the guidelines set out in RG 111.

18 Pursuant to RG 111, a transaction is reasonable if it is fair. Further, in our opinion, if the Scheme is “fair and reasonable” it must also be “in the best interests” of shareholders.

19 Consequently, in our opinion, the Scheme is also “reasonable” and “in the best interests” of QMS shareholders in the absence of a superior proposal.

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Assessment of the Scheme 20 We summarise below the likely advantages and disadvantages of the Scheme for QMS

Shareholders.

Advantages 21 In our opinion, the Scheme has the following benefits for QMS Shareholders:

(a) the Cash Scheme Consideration of $1.22 per share is consistent with our assessed value range for QMS shares on a 100% controlling interest basis. Thus, in our view, QMS Shareholders are being paid an appropriate price to compensate them for the fact that control of QMS will pass to Quadrant if the Scheme is approved

(b) the Cash Scheme Consideration represents a significant premium to the market prices of QMS prior to the announcement of the Scheme. Furthermore, the premium is consistent with observed premiums generally paid to target company shareholders in comparable circumstances

(c) if the Scheme does not proceed, and in the absence of an alternative offer or proposal, the price of QMS shares is likely to trade at a significant discount to our valuation and the Cash Scheme Consideration due to the portfolio nature of individual shareholdings.

Disadvantages 22 QMS Shareholders should note that if the Scheme is implemented they will no longer hold an

interest in QMS. QMS Shareholders will therefore not participate in any future value created by the company over and above that reflected in the Cash Scheme Consideration.

23 However, as our assessed value of QMS shares is consistent with the Cash Scheme Consideration, in our opinion, the present value of QMS’s future potential is reflected in the Cash Scheme Consideration.

Conclusion 24 Given the above analysis, we consider that the advantages of the Scheme outweigh the

disadvantages from the perspective of QMS Shareholders. Consequently, in our view, the acquisition of QMS shares by Quadrant under the Scheme is fair and reasonable and in the best interests of QMS Shareholders in the absence of a superior proposal.

Other matters 25 QMS Shareholders should be aware that the Rollover Shareholders are being provided with

the opportunity to retain an interest in the QMS business by receiving some Scrip Consideration. However, in our view, the market value of the HoldCo shares to be issued to the Rollover Shareholders as Scrip Consideration (immediately post implementation of the Scheme) is no greater than $1.22 per QMS share (on an equivalent basis) for the reasons set out at paragraphs 262 to 263.

General 26 In preparing this report we have considered the interests of QMS Shareholders as a whole.

Accordingly, this report only contains general financial advice and does not consider the personal objectives, financial situations or requirements of individual shareholders.

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27 The impact of approving the Scheme on the tax position of QMS Shareholders depends on the individual circumstances of each investor. QMS Shareholders should read the Scheme Booklet and consult their own professional advisers if in doubt as to the taxation consequences of the Scheme.

28 The ultimate decision whether to approve the Scheme should be based on each QMS Shareholder’s assessment of their own circumstances. If QMS Shareholders are in doubt about the action they should take in relation to the Scheme or matters dealt with in this report, shareholders should seek independent professional advice.

29 For our full opinion on the Scheme and the reasoning behind our opinion, we recommend that QMS Shareholders read the remainder of our report.

Yours faithfully

Craig Edwards Nathan Toscan Authorised Representative Authorised Representative

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Table of contents

Section Page

I Key terms of the Scheme 9

Terms 9 Conditions 9 Scheme resolutions 11

II Scope of our report 12

Purpose 12 Basis of assessment 13 Limitations and reliance on information 14

III Profile of QMS 16

Overview 16 History 16 Current operations 18 Financial performance 25 Financial position 27 Share capital and performance 30

IV Industry overview 34

Introduction 34 Australian media industry 34 Out-of-home advertising 35 New Zealand media industry 45 Global sports media industry 47

V Valuation methodology 50

Valuation approaches 50 Methodologies selected 51

VI Valuation of 100% of QMS 52

Overview 52 Valuation of QMS Australia 52 Valuation of QMS Sport 60 Valuation of investment in MediaWorks 64 Valuation of corporate costs 70 Other assets / (liabilities) 71 Net debt 71 Share capital outstanding 72 Valuation summary 72

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Section Page

VII Evaluation of the Scheme 74

Assessment of fairness 74 Assessment of reasonableness 74 Summary of opinion on the Scheme 77 Conclusion on the Scheme 78 Other matters 78

Appendices A Financial Services Guide

B Qualifications, declarations and consents

C Trading evidence

D Transaction evidence

E Glossary

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I Key terms of the Scheme

Terms 30 On 29 October 2019, QMS Media Limited (QMS or the Company) announced that it and

Shelley BidCo Pty Ltd (BidCo or the Bidder), an entity controlled by Quadrant Private Equity and its institutional partners (together, Quadrant) had signed a Scheme Implementation Deed (the Agreement) pursuant to which BidCo will acquire all the fully paid ordinary shares in QMS.

31 The proposed acquisition of the shares is to be implemented via a scheme of arrangement between QMS and its shareholders (the Scheme) and is subject to a number of conditions precedent (as summarised below).

32 If the Scheme is approved and implemented:

(a) QMS Shareholders – QMS shareholders, excluding the entities associated with Mr Nettlefold and Mr O’Neill, will receive $1.22 cash (Cash Scheme Consideration) for each QMS share they hold on the Scheme Record Date (14 February 2020)

(b) Rollover Shareholders – entities associated with Mr Nettlefold and Mr O’Neill (which collectively hold 14.9% of QMS’s ordinary shares on issue) will receive a mix of Cash Scheme Consideration and shares in HoldCo (Scrip Consideration)4, for the QMS shares they hold on the Scheme Record Date (14 February 2020)5.

33 Subject to QMS Board approval, QMS shareholders will also be entitled to receive a Final Dividend of up to 1.3 cents per QMS share for the financial year ending 31 December 2019 if they hold QMS shares on the record date for that dividend. The payment of the Final Dividend will not alter the consideration payable under the Scheme.

Conditions 34 The Scheme is subject to the satisfaction or waiver of a number of conditions precedent,

including the following which are outlined in the Agreement. These include:

(a) respective regulatory approvals (or lapsing of time to make the approval) and/or consents are obtained from the Foreign Investment Review Board and the NZ Overseas Investment Office (NZ OIO) by 5:00pm on the day before the Second Court Date

(b) approval of the Scheme by the Court in accordance with s411(4)(b) of the Corporations Act

(c) QMS shareholder approval by the requisite majorities at the Scheme Meetings under the Corporations Act

4 Rollover Shareholders will receive 75.0% of their HoldCo shares as ordinary shares with the remaining 25.0%

being preference shares (collectively, the “HoldCo Shares”). 5 The Rollover Shareholders have entered into binding contractual commitments, in favour of BidCo, to elect to


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(d) no temporary or final order, decision or decree issued by any court of competent jurisdiction or Government Agency which restrains, prohibits or otherwise materially adversely impacts upon the Scheme is in effect at 8.00am on the Second Court Date

(e) no “QMS Prescribed Occurrence” or “QMS Regulated Event” (as defined in Schedule 1 of the Agreement) occurs in respect of QMS on or before 8.00am on the Second Court Date

(f) no “Material Adverse Change” (as defined in Schedule 1 of the Agreement) occurs in respect of QMS on or before 8.00am on the Second Court Date

(g) the Bidder Warranties and QMS Warranties are true and correct in all material respects as at 8:00am on the Second Court Date

(h) counterparties to the COC Contracts (as defined in Schedule 1 of the Agreement) have provided and not withdrawn, cancelled or revoked: (i) written consent to the change of control or ownership of QMS, or a subsidiary of

QMS, that will result from the implementation of the Scheme; or (ii) written confirmation that they will not terminate the relevant COC Contract to

which they are a party as a result of the implementation of the Scheme (i) an independent expert issues a report which concludes and continues to conclude that

the Scheme is in the best interests of QMS shareholders.

35 In addition, QMS has agreed that during the Exclusivity Period it will not:

(a) solicit, invite, encourage or initiate any enquiries, proposals, discussions or negotiations which may reasonably be expected to lead to a competing transaction

(b) continue or participate in any discussions or negotiations in relation to any inquiry, expression of interest, offer, proposal or discussion which may reasonably be expected to encourage or lead to a competing transaction

(c) negotiate, accept or enter into any agreement, arrangement or understanding in relation to a competing transaction

(d) provide any non-public information to a third party or solicit, initiate, facilitate, encourage or invite any third party to undertake due diligence investigations for the purposes of enabling that party to table a competing transaction

(e) and QMS agrees to notify BidCo of any approach in relation to an actual or potential competing proposal.

36 The exclusivity obligations do not apply if the QMS Board determines:

(a) the proposed competing transaction is a superior proposal or may reasonably be expected to lead to a competing transaction which is a superior proposal; or

(b) based on written advice from its legal advisers, that compliance with exclusivity obligations would involve a breach of fiduciary or statutory duties.

37 A break fee of $4.2 million is payable by QMS to the Bidder in certain circumstances as specified in the Agreement.

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38 The above is a summary only and further detail is set out in the Agreement as well as in the Scheme Booklet.

Scheme resolutions 39 As the Rollover Shareholders are being offered a form of consideration under the Scheme

which is different to the consideration offered to the QMS Shareholders, they will constitute a separate class of members for the purposes of the voting on the Scheme. Accordingly, QMS will request that the court convene separate Scheme Meetings, being:

(a) the Scheme Meeting of QMS Shareholders generally, excluding the Rollover Shareholders (General Scheme Meeting)

(b) the Scheme Meeting of the Rollover Shareholders only (Rollover Shareholders Scheme Meeting).

40 Under the Corporations Act, the Scheme is approved if the resolutions approving the Scheme are passed by:

(a) a majority in number (more than 50%) of the QMS Shareholders present and voting at the General Scheme Meeting (in person or by proxy), and by 75% of the votes cast on the resolution at that meeting

(b) a majority in number of the Rollover Shareholders present and voting at the Rollover Shareholders Scheme Meeting (in person or by proxy), and by 75% of the votes cast on the resolution at that meeting (noting that Mr Nettlefold and Mr O’Neill are required, by contractual commitments with BidCo, to vote in favour of the Scheme in the absence of a superior proposal which is recommended by the QMS Directors).

41 If the resolutions are passed by the requisite majorities, and the other conditions of Scheme are satisfied or waived, a second Court hearing will be held to approve the Scheme which, if approved, will become binding on all QMS shareholders who hold QMS shares as at the Scheme Record Date, whether or not they voted for the Scheme (and even if they voted against the Scheme).

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II Scope of our report

Purpose 42 The Scheme is to be effected pursuant to Part 5.1 of the Corporations Act, which governs

schemes of arrangement. Part 3 of Schedule 8 of the Corporations Regulations prescribes information to be sent to shareholders in relation to a member’s scheme of arrangement pursuant to s411 of the Corporations Act.

43 Paragraph 8303 of Schedule 8 of the Corporations Regulations provides that, where the other party to the transaction holds not less than 30% of the voting shares in the company the subject of the scheme, or where a director of the other party to the transaction is also a director of the company the subject of the scheme, the explanatory statement must be accompanied by an IER assessing whether the proposed scheme is in the best interests of shareholders and state reasons for that opinion.

44 In addition, when an IER is required for a scheme that involves a change of control of the company the subject of the scheme, RG 111 also requires the expert to opine on whether the proposal is “fair” and “reasonable” to shareholders of the company.

45 Quadrant currently holds less than 30% of the QMS shares on issue6 and has no representation on the QMS Board. Accordingly, there is no strict legal requirement under the Corporations Act or the Corporations Regulations for an IER in relation to the Scheme. However, it is a condition precedent to the Scheme as well as a qualification to the QMS Directors’ recommendation of the Scheme that an independent expert concludes (and continues to conclude) that the Scheme is in the best interests of QMS shareholders (except as (except as noted below in paragraph 48).

46 The Directors of QMS have therefore requested that LEA prepare an IER stating whether the proposed acquisition of the shares in QMS by Quadrant under the Scheme is fair and reasonable and in the best interests of QMS Shareholders and the reasons for that opinion.

47 This report has been prepared by LEA for the benefit of QMS Shareholders to assist them in considering the resolution to approve the Scheme. Our report will accompany the Notice of Meeting and Scheme Booklet to be sent to QMS Shareholders. The sole purpose of our report is to determine whether, in our opinion, the Scheme is fair and reasonable and in the best interests of QMS Shareholders.

48 For the avoidance of doubt, this IER does not separately opine on whether the Scheme is fair and reasonable and in the best interests of the Rollover Shareholders. This is because:

(a) subject only to the emergence of a superior proposal that is recommended by the QMS Directors, each of the Rollover Shareholders has already made a binding contractual commitment in favour of BidCo to: (i) vote in favour of the Scheme; and

6 Quadrant has a relevant interest in 14.9% of QMS’s ordinary shares on issue, comprising the relevant interests of

the entities associated with Mr Nettlefold and Mr O’Neill (which hold 13.4% and 1.4% of QMS’s ordinary shares on issue respectively).

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(ii) receive the Cash Scheme Consideration and the Scrip Consideration in prescribed proportions7.

Accordingly, in LEA’s view, the Rollover Shareholders have already formed their decision as to the merits of the Scheme as it applies to them

(b) the Rollover Shareholders are sophisticated or professional investors and are associated with members of QMS’s senior management team (i.e. Mr Nettlefold and Mr O’Neill, each of whom has extensive knowledge and understanding of the QMS business)

(c) the merits of the Cash Scheme Consideration are already assessed within this IER; and (d) being sophisticated or professional investors, we consider the Rollover Shareholders to

be capable of forming their own view as to the extent to which they have agreed to accept the Scrip Consideration (over the Cash Scheme Consideration).

49 The ultimate decision whether to approve the Scheme should be based on each QMS Shareholder’s assessment of their own circumstances. If in doubt about the action they should take in relation to the Scheme or matters dealt with in this report, shareholders should seek independent professional advice.

Basis of assessment 50 In preparing our report we have given due consideration to the Regulatory Guides issued by

ASIC including, in particular, RG 111.

51 RG 111 distinguishes “fair” from “reasonable” and considers:

(a) the Scheme to be “fair” if the value of the Scheme Consideration is equal to or greater than the value of the securities that are the subject of the Scheme. A comparison must be made assuming 100% ownership of the target company

(b) the Scheme to be “reasonable” if it is fair. The Scheme may also be “reasonable” if, despite not being “fair” but after considering other significant factors, there are sufficient reasons for shareholders to approve the Scheme in the absence of a superior proposal.

52 There is no legal definition of the expression “in the best interests”. However, RG 111 states that a Scheme may be “in the best interests of the members of the company” if there are sufficient reasons for securityholders to vote in favour of the Scheme in the absence of a higher offer.

53 In our opinion, if the Scheme is “fair” and “reasonable” under RG 111 it must also be “in the best interests” of QMS Shareholders.

7 Mr Nettlefold and entities associated with him are contractually required to elect to receive the Scrip Consideration

in respect of 70.9% of their QMS shares (excluding performance rights) and Mr O’Neill and entities associated with him are contractually required to elect the Scrip Consideration in respect of 49.6% of their QMS shares (excluding performance rights).

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54 Our report has therefore considered:

(a) the market value of 100% of the shares in QMS (b) the Cash Scheme Consideration offered of $1.22 per QMS share (c) the extent to which (a) and (b) differ (in order to assess whether the Scheme is fair

under RG 111) (d) the extent to which a control premium is being paid to QMS Shareholders (e) the extent to which QMS Shareholders are being paid a share of any synergies likely to

be generated pursuant to the potential transaction (f) the listed market price of QMS shares, both prior to and subsequent to the

announcement of the proposed Scheme (g) the likely market price of QMS shares if the proposed Scheme is not approved (h) the value of QMS to an alternative offeror and the likelihood of a higher alternative

offer being made for QMS prior to the date of the Scheme meeting (i) the advantages and disadvantages of the Scheme from the perspective of QMS

Shareholders; and (j) other qualitative and strategic issues associated with the Scheme.

Limitations and reliance on information 55 Our opinions are based on the economic, share market, financial and other conditions and

expectations prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

56 Our report is also based upon financial and other information provided by QMS and its advisers. We understand the accounting and other financial information that was provided to us has been prepared in accordance with the Australian equivalents to International Financial Reporting Standards. We have considered and relied upon this information and believe that the information provided is reliable, complete and not misleading and we have no reason to believe that material facts have been withheld.

57 The information provided was evaluated through analysis, enquiry and review to the extent considered appropriate for the purpose of forming an opinion on the Scheme from the perspective of QMS Shareholders. However, we do not warrant that our enquiries have identified or verified all of the matters which an audit, extensive examination or “due diligence” investigation might disclose. Whilst LEA has made what it considers to be appropriate enquiries for the purpose of forming its opinion, “due diligence” of the type undertaken by companies and their advisers in relation to (for example) prospectuses or profit forecasts is beyond the scope of an IER.

58 Accordingly, this report and the opinions expressed therein should be considered more in the nature of an overall review of the anticipated commercial and financial implications of the proposed transaction, rather than a comprehensive audit or investigation of detailed matters. Further, this report and the opinions therein, must be considered as a whole. Selecting specific sections or opinions without context or considering all factors together, could create a

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misleading or incorrect view or opinion. This report is a result of a complex valuation process that does not lend itself to a partial analysis or summary.

59 An important part of the information base used in forming an opinion of the kind expressed in this report is comprised of the opinions and judgement of management of the relevant companies. This type of information has also been evaluated through analysis, enquiry and review to the extent practical. However, it must be recognised that such information is not always capable of external verification or validation.

60 We in no way guarantee the achievability of budgets or forecasts of future profits. Budgets and forecasts are inherently uncertain. They are predictions by management of future events which cannot be assured and are necessarily based on assumptions of future events, many of which are beyond the control of management. Actual results may vary significantly from forecasts and budgets with consequential valuation impacts.

61 In forming our opinion, we have also assumed that:

(a) the information set out in the Scheme Booklet is complete, accurate and fairly presented in all material respects

(b) if the Scheme becomes legally effective, it will be implemented in accordance with the terms set out in the Agreement and the terms of the Scheme itself.

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III Profile of QMS

Overview 62 QMS is a leading provider of out-of-home advertising and media services across a portfolio of

owned and represented digital and static billboards, street furniture, sport, airport and transit media across Australia, NZ and overseas markets. The Company operates across two business segments, QMS Australia and QMS Sport, and holds a 40% equity interest in Mediaworks New Zealand (MediaWorks). QMS is headquartered in Melbourne and employs over 520 staff which operate from 31 locations throughout Australia, NZ, Europe, North America and South America.

History 63 QMS was established in 2014 as an aggregation of QMS APAC and the outdoor advertising

assets of a number of businesses including Paramount Outdoor, Octopus Media and Drive By Media. QMS APAC was formed as a joint venture (JV) partnership with Qatar Media Services WLL in 2010 to develop strategic outdoor advertising assets across the Asia Pacific (APAC) region.

64 The Company listed on the Australian Securities Exchange (ASX) on 26 June 2015 and commenced trading on 29 June 2015. Since listing, QMS has grown both organically and through the acquisition of a number of complementary businesses. A summary of the more material acquisitions is set out below:

QMS – material acquisitions Date(1) Acquisition Business / asset overview Dec 15 iSite Media

Limited (iSite) ($44.4 million)

iSite was one of the largest outdoor advertising companies in NZ which operated across a number of outdoor advertising formats including billboards, national transit networks and two of NZ’s four major airports

Jan 16 ABsee ($6.6 million)

Acquired a 51% stake in ABsee. The company operated the Gold Coast City Council’s outdoor advertising concession for street furniture throughout the Gold Coast region

Dec 16 Sports digital outdoor media and technology assets ($22.4 million)

Comprised a number of strategic investments including: • 80% of Out and About Marketing and Media (OAMM), a

leading provider of in-bowl digital stadium including LED and digital billboards and other advertising

• 50% of LIVE Docklands, which held the rights to several digital advertising assets within Melbourne’s Etihad Stadium

• 20% of Sportsmate Technologies Pty Ltd (Sportsmate), a leading developer of sporting applications

Feb 17 Billboard assets ($14.5 million)

Purchased up to 39 large format billboards throughout Victoria from Total Outdoor Media Pty Ltd. At the time of the acquisition the average tenure of the underlying leases was more than 10 years

Aug 18 (transaction completed Mar 19)

International sports technology and digital media assets ($40 million)

Acquired a 90% stake in TGI Systems Corporation (TGI) and TGI Europe GmbH (TGIE). TGI / TGIE are world leaders in the delivery of sports technology including high end LED signage, software management platforms and a range of unique fan engagement tools to help clubs, agencies and rights holders optimise their brand exposure and enrich consumer experience at major sporting events

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QMS – material acquisitions Date(1) Acquisition Business / asset overview Dec 18 (transaction completed Sep 19)

Merger of QMS New Zealand and MediaWorks (undisclosed)

QMS merged its NZ out-of-home, digital media and production business QMS New Zealand (QMS NZ) with MediaWorks, NZ’s leading independent radio, TV and digital business. As part of the transaction, QMS received a 40% shareholding in the expanded MediaWorks business, with the remaining 60% retained by Oaktree Capital Management (Oaktree)

Aug 19 TLA Australia / Stride Sports Management ($32.7 million)

TLA Worldwide (Aust) Pty Ltd (TLA Australia) and Stride Sports Management Pty Ltd (Stride) are leaders in talent management, events consulting, sponsorships, activations, merchandising and sports marketing. They have diverse client bases of sporting talent across major brands and sporting bodies across the Australian Football League (AFL), cricket, netball, Olympic sports and media throughout Australia and the United Kingdom (UK). At the time of the acquisition the business had over 120 employees and operated from offices in across Australia and the UK

Note: 1 Date of announcement.

65 The acquisitions undertaken by the Company since listing on the ASX have increased QMS’s

size and diversification, noting in particular that:

(a) the purchase of iSite significantly enhanced QMS’s operations in NZ, adding a national portfolio of over 450 static billboards, three digital billboards and advertising assets on over 1,500 buses

(b) the strategic investment in OAMM8 and the other sports digital outdoor media and technology assets in December 2016 provided QMS with its entry into the sports-venue advertising segment and established the QMS Sport division

(c) the addition of TGI / TGIE provided QMS Sport with an increased geographic footprint to international markets and provided the business with diversified revenue streams

(d) the merger of QMS NZ and MediaWorks created a leading multi-media advertising group in NZ, with advertising capabilities across four platforms comprising out-of-home, radio, TV and digital

(e) the acquisition of TLA Australia provided QMS Sport with an enhanced service offering both domestically and internationally, creating a vertically integrated sports advertising platform with significant cross-sell opportunities to TLA Australia’s businesses merchandising and events / consulting capabilities.

8 OAMM was subsequently rebranded to QMS Sport Australia.

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Current operations 66 QMS is headquartered in Melbourne and employs approximately 520 staff which operate

from a global footprint of 31 offices throughout Australia, Europe, North America and South America. The Company operates across two business divisions, QMS Australia and QMS Sport, and holds a 40% equity interest in MediaWorks. An overview of QMS’s operations is set out below:

QMS – operations

Note: 1 Excludes release of contingent consideration and gain on the sale of land and buildings. 2 Prior to allocation of corporate costs.

QMS Australia 67 QMS Australia is QMS’s largest operating division. The division primarily operates across

an established out-of-home advertising portfolio comprising digital and static billboards, street furniture and airport media throughout Australia. QMS Australia also operates a specialised print production and installation businesses as well as out-of-home advertising services in Indonesia.

68 The following diagram depicts the different regions in which QMS Australia operates and the advertising formats offered in each region:

Q MS Australia Q MS Sport MediaWorks (40%)

• Provider of out-of-home advertising on billboards, street furniture and airports as well as specialised print production and installation

• FY19 revenue: $123.3(1) million• FY19 EBITDA: $42.0(2) million

• Global integrated sports business with access to over 3,000 global sporting events

• FY19 revenue: $52.7 million• FY19 EBITDA $11.1(2) million

• Leading multi-media group in New Zealand with a portfolio of established out-of-home, radio, TV and digital advertising assets

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QMS Australia – geographic footprint(1)

Note: 1 Excludes Indonesian operations. Source: QMS.

Australian out-of-home portfolio 69 QMS Australia’s established out-of-home advertising portfolio comprises digital and static

billboards, street furniture and airport media throughout Australia. Digital and static billboards are the largest contributors, noting that the proportion of revenue generated by digital billboards has increased in recent periods as QMS has (due to demand and revenue enhancement opportunities9) actively engaged in a digitisation program, involving the conversion of existing static advertising panels to digital screens, as well as the establishment of greenfield developments of new large landmark digital billboard sites. For the six month period to 30 June 2019, digital media contributed 81% of Australian media out-of-home advertising revenue.

70 Billboard sites are either freestanding or fixed to the exterior of roofs and buildings and are located on main arterial roads, motorways and high traffic pedestrian areas. The majority of revenue generated by billboard assets relates to the Company’s owned sites10, however QMS Australia also represents a number of sites owned by third parties (member sites) for which it receives a sales commission for all net revenue recorded. Both owned and member sites are located on property leased or licensed through agreements with landlords and asset owners.

9 QMS has found that on average a digital panel can increase revenue by an average of four to five times as

digitisation allows for multiple advertisers, time of day advertising and greater interactivity and engagement. 10 QMS Australia owns the physical billboard structure on owned sites. Member sites are owned by members.

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71 QMS Australia’s portfolio of digital screens has continued to grow, with a further 30 sites added in the 12 months to 30 June 2019:

QMS Australia – digital billboard sites Jun 17 Jun 18 Jun 19 Victoria 30 34 46 Queensland 12 16 22 New South Wales 6 20 29 South Australia 3 6 6 Western Australia 3 8 11 Canberra - 2 2 Total 54 86 116

72 On 8 October 2019, QMS announced that it had been appointed to manage the sales and

marketing activities for the Essendon Airport outdoor advertising portfolio by NM Media, effective 1 November 2019. The portfolio consists of eight existing static billboards, a number of which are located on the Tullamarine Freeway which connects Melbourne Airport and the north-west with the Melbourne central business district (CBD).

Key contracts / licenses 73 QMS Australia relies on lease / license agreements with landlords, asset owners or

government departments for the use of site locations. Billboard contracts are typically with larger government / private organisations or individual landlords and tend to be held through multi-year contractual arrangements.

74 QMS Australia has contracts with a variety of landlords and has a diversified maturity profile.

Key customers 75 QMS Australia provides a range of out-of-home advertising solutions to its customers

throughout Australia which include media agencies (that represent a variety of advertisers) as well as advertisers that deal directly with QMS.

76 QMS has a diversified media agency client and customer base, with approximately 85% of revenue from media agencies and 15% from direct clients over the six months to 30 June 2019.

Other operations 77 In addition to its out-of-home advertising portfolio located throughout Australia, QMS

Australia provides out-of-home advertising, production and installation services under the MMT, Omnigraphics, BMG and INsite Media brands. A summary of the services provided by each of these brands is set out below:

(a) MMT – specialised print production business based in Brisbane focusing on billboards and building wraps through to exhibitions and event displays

(b) Omnigraphics – specialised print production business based in Melbourne (c) BMG – provides installation solutions for printed advertising and is complementary to

the MMT and Omnigraphics businesses

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(d) INsite Media – Indonesian division of QMS which comprises a portfolio of advertising assets including large format signage, prime advertising sites at major Indonesian airports as well as bridge concession signage. The division also operates a sales agency business which sells advertising space to advertisers on behalf of third party outdoor advertising asset owners.

QMS Sport 78 QMS Sport is a leading digital sports media and infrastructure business that manages over

3,000 individual global sporting events annually throughout Australia and overseas in key global sporting markets and employs 229 staff. The business is one of the largest on-field media rights holders and infrastructure providers in Australia and has offices throughout Australia, Europe, North America and South America.

79 The following diagram depicts the operating locations and sport coverage regions in which QMS Sport operates:

QMS Sport – office locations and sport coverage

Source: QMS.

80 QMS Sport provides infrastructure, media rights, virtual technology, fan engagement, talent,

events and merchandising services to a range of clients including global sporting bodies, sporting clubs, stadiums and corporate clients. An overview of QMS Sport’s operations is set out below: F

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QMS Sport - operations

Source: QMS.

81 QMS Sport’s services are provided by a number of businesses and brands, a summary of

which is set out below:

QMS Sport – key businesses and brands

Business

QMS ownership

% Overview QMS Sport Australia

100.0 Largest sports ground LED operators in Australia, providing complete turnkey sports solution of high profile, in-bowl and other advertising opportunities across various channels. The business serves a variety of sporting codes including the AFL, National Rugby League, A-League, netball, Super Rugby and National Basketball League across a number of venues via a combination of club and venue rights agreements

TGI / TGIE 90.0 Provider of static and digital perimeter signage infrastructure and software solutions across the United States of America (US), Europe and South America. The business also provides software management platforms and a range of unique fan engagement tools to help clubs, agencies and rights holders to optimise brand exposure. The business has key relationships with high sporting organisations and clubs including UEFA, FC Barcelona, Manchester United, Liverpool and Juventus

Stella Vista 90.0 Designs and supplies LED screens and displays such as scoreboards, digital billboards and electronic perimeter boards for cricket matches across South Africa, India, Pakistan, Bangladesh, West Indies, United Arab Emirates and England as well as the ICC World Cup. Stella Vista is a wholly owned subsidiary of TGIE

TLA 100.0 Leading, fully integrated talent representation and sports marketing group which provides sports merchandise services, brand and media consulting, venue sponsorship and in-stadia advertising and talent management services

Stride Group 100.0 Integrated talent management business with a strong focus on AFL athletes

Sportsmate 100.0 Australian developer of sporting applications that connect fans with their favourite sports and clubs across a range of sporting codes

Infrastructure Media Rights Virtual Fan Engagement Talent, Events & Merchandising

Core services

• LED signage, high impact bolster and stadium signage

• On field digital media• IPTV network• Mobile LED screens

• Coordinating media rights across infrastructure

• Content creation / game day operations

• Virtual technology for time shifted viewing to resell into multiple jurisdictions

• Wi-fi mobile engagement from in-stadium advertising extending to pre and post match experience (digital advertising via Instagram, Twitter, Facebook feeds)

• Sport merchandise• Create and develop

unique sporting events• Talent management

across various sports e.g. AFL, netball

Revenue model

• Pay per game / event / broadcast

• Contract lengths 2-7 years

• Management fee for coordinating media rights across events

• Contract lengths 1-5 years

• Pay per game / event / broadcast

• Licence fee• Pay per event / view

• Wholesale• One-off income for

events• Management fees

Clients

• Access to ~3,000 sporting events through:‒ Global sporting

bodies‒ Sporting clubs‒ Stadia

• Chemist Warehouse• TAB• Ladbrokes• Harvey Norman• McDonald’s

• V8 Super Cars• NRL Rugby League

• Jacksonville Jaguars • Victorian Racing Club• Invictus Games• Corporate clients (e.g.

NAB, Caltex)• Sport athletes, coaches,

media talent

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82 QMS Sport operations are highly seasonal and are skewed to the first half of the calendar year

(with the exception of TLA Australia and Stride) due to the higher number of games which are played during this period relative to the second half of the calendar year.

MediaWorks (QMS NZ) 83 On 10 December 2018, QMS announced it had finalised terms for the merger of its NZ out-

of-home, digital media and production business, QMS NZ, with MediaWorks, NZ’s leading independent radio, TV and digital business. The merger received approval from the NZ OIO on 29 July 2019 and was completed on 3 September 2019.

84 As part of the transaction, QMS received a 40% equity interest in the expanded MediaWorks business with the remaining 60% retained by Oaktree. The investment in MediaWorks is treated by QMS as an equity accounted investment for financial reporting purposes.

85 MediaWorks is NZ’s leading multi-media group, with advertising capabilities across four platforms including out-of-home, radio, TV and digital. A summary of MediaWorks operations is set out below:

MediaWorks - operations

Radio 86 Radio is MediaWorks’ largest segment, accounting for a significant proportion of revenue.

MediaWorks’ radio business is the largest radio network in NZ with some 2.4 million weekly listeners across its portfolio of nine radio formats and brands. The business also operates the “rova” streaming application for all radio brands.

Radio O ut-of-home TV

• Largest radio network in New Zealand with over 2.4 million weekly listeners

• Provider of out-of-home advertising on billboards, transit, street furniture and airports

• Operator of the free-to-air television networks Three and Bravo in New Zealand

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NZ out-of-home advertising 87 MediaWorks operates an established portfolio of premium landmark digital and static

billboards, transit and airport media under the QMS NZ brand. MediaWorks also provides out-of-home advertising to sporting stadiums and events under the QMS Sport brand.

88 The following diagram depicts the different regions in which QMS NZ operates and the advertising formats offered in each region:

QMS NZ – out-of-home locations

Source: QMS.

89 Post-merger, MediaWorks entered into an unconditional agreement to acquire ETC Media

Limited’s (ETC) premium Christchurch digital billboard portfolio, which added a further 12 large format digital billboards to its existing national digital portfolio.

TV 90 MediaWorks owns and operates the NZ TV networks Three and Bravo. On 18 October 2019,

QMS announced that MediaWorks had commenced a process to sell its TV business including its associated real estate, which comprises its head office and studios, as a result of poor industry conditions in the free-to-air television market in NZ.

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Financial performance 91 The financial performance of QMS for the four half years to 30 June 2019 and 12 months to

31 December 2018 and 30 June 2019 is set out below:

QMS – statement of financial performance(1)(2) Six months to Twelve months to

31 Dec 17

$m 30 Jun 18

$m 31 Dec 18

$m 30 Jun 19

$m 31 Dec 18

$m 30 Jun 19

$m Continuing operations Revenue from customer contracts 65.3 76.5 73.4 97.4 149.9 170.8 Other income 0.3 0.1 1.6 1.8 1.7 3.4 Total underlying revenue 65.5 76.6 75.0 99.2 151.6 174.2 Cost of sales (30.7) (40.3) (38.2) (43.0) (78.5) (81.2) Gross profit 34.9 36.3 36.8 56.2 73.2 93.1 Operating expenses (18.7) (17.3) (19.9) (27.3) (37.3) (47.2) Share of loss from associates (0.7) (0.0) - - (0.0) - Underlying EBITDA(3) 15.4 18.9 16.9 28.9 35.9 45.8 Depreciation (3.4) (3.4) (3.8) (4.6) (7.1) (8.4) Amortisation (3.3) (4.7) (5.2) (5.4) (9.8) (10.6) Underlying EBIT(3) 8.7 10.9 8.0 18.9 18.9 26.9 Net finance expense (1.2) (2.3) (2.7) (4.2) (4.9) (6.9) Non-recurring items(4) (0.2) 0.7 2.1 1.8 2.8 3.8 PBT(3) 7.3 9.4 7.4 16.5 16.8 23.9 Income tax expense (2.9) (0.8) (2.4) (5.8) (3.2) (8.2) NPAT(3) 4.4 8.6 5.0 10.7 13.6 15.7 Discontinued operations(5) NPAT 3.9 1.4 2.6 4.3 4.0 6.9 Total NPAT 8.3 10.0 7.6 15.0 17.6 22.6 Non-controlling interests 0.1 0.2 0.1 1.6 0.3 1.7 NPAT attributable to QMS s/holders 8.2 9.9 7.4 13.4 17.3 20.8 Note: 1 Rounding differences may exist. 2 Prior to impacts from Australian Accounting Standard Board (AASB) 16 Leases. 3 Earnings before interest, taxes, depreciation and amortisation (EBITDA), earnings before interest and

taxes (EBIT), profit before tax (PBT), net profit after tax (NPAT). 4 Non-recurring items include release of contingent consideration, costs associated with acquisitions and

restructuring, integration costs and gain on sale of land and buildings. 5 Relates to QMS NZ which was classified as held for sale following the announcement of the proposed

merger with MediaWorks on 10 December 2018. Prior year results for 2HY CY17 and 1HY CY18 have also been restated to classify QMS NZ as discontinued operations. Following the completion of the merger, future contributions from QMS’s 40% shareholder in MediaWorks will be treated as a share of profits from associates.

Source: QMS.

92 In addition to the above, we set out below a breakdown of revenue and underlying EBITDA

by operating segment:

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QMS – statement of financial performance(1)(2) Six months to Twelve months to

31 Dec 17

$m 30 Jun 18

$m 31 Dec 18

$m 30 Jun 19

$m 31 Dec 18

$m 30 Jun 19

$m Underlying revenue(3) QMS Australia 55.3 58.5 62.0 61.3 120.5 123.3 QMS Sport 10.3 18.1 13.0 39.7 31.1 52.7 Intersegment eliminations - - - (1.7) - (1.7) Continuing operations 65.5 76.6 75.0 99.2 151.6 174.2 QMS NZ 33.5 26.9 28.2 27.9 55.2 56.1 Total 99.0 103.5 103.2 127.1 206.8 230.3 Underlying EBITDA QMS Australia 19.3 18.6 20.3 21.6 39.0 42.0 QMS Sport 0.0 3.3 (0.3) 11.4 3.0 11.1 Corporate costs (4.0) (3.0) (3.1) (4.1) (6.1) (7.3) Continuing operations 15.4 18.9 16.9 28.9 35.9 45.8 QMS NZ 7.3 4.1 5.8 5.0 9.9 10.8 Total 22.7 23.1 22.7 33.9 45.8 56.6 Underlying EBITDA margins QMS Australia 35.0% 31.9% 32.8% 35.3% 32.4% 34.0% QMS Sport 0.1% 18.0% (2.2%) 28.7% 9.5% 21.1% QMS NZ 21.9% 15.3% 20.6% 18.0% 18.0% 19.3% Total 22.9% 22.3% 22.0% 26.7% 22.2% 24.6% Note: 1 Rounding differences may exist. 2 Prior to impacts from AASB 16 – Leases. 3 Where applicable, underlying revenue excludes the release of contingent consideration, gain on sale of

land and buildings and other non-recurring income. Source: QMS.

93 Both QMS Australia and QMS Sport are seasonal businesses. QMS Australia’s results are

slightly skewed to the second half of the calendar year due to the significant advertising expenditure which is spent in the December quarter during the lead up to Christmas, whilst the results for QMS Sport are skewed towards the first half of the calendar year due to the relatively high number of sporting matches played during this period11.

94 In addition, the financial performance of QMS Sport has been impacted by the completion of a number of acquisitions. Details of the material completed acquisitions are set out below:

QMS Sport – material completed acquisitions Six months to

31 Dec 17

$m 30 Jun 18

$m 31 Dec 18

$m 30 Jun 19

$m

Sportsmate(1)

TGI / TGIE

Stella Vista

11 The seasonality of QMS Sport in Australia has reduced following the acquisition of TLA Australia and Stride,

which are weighted to the second half of the calendar year.

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Note: 1 As stated above, on 7 December 2017, QMS acquired 20% of Sportsmate which was increased to

33% on 19 April 2018. On 16 August 2018, QMS acquired the remaining 67% share capital in Sportsmate and this entity was consolidated for financial reporting purposes.

95 Further details of the earnings contributions from these acquisitions are set out in Section V.

CY19 & CY20 outlook 96 On 12 August 2019, as part of its acquisition and capital raising presentation, QMS provided

pro-forma12 CY19 and CY20 EBITDA guidance for QMS Sport (including synergies, a corporate cost allocation and excluding minority interests) of $18.7 million and $24.0 million respectively. In addition, on 23 August 2019, as part of its half year results announcement, QMS reaffirmed its group CY19 EBITDA guidance of $60 million to $62 million13.

Financial position 97 The financial position of QMS as at 31 December 2018 and 30 June 2019 is set out below:

QMS – statement of financial position(1)

31 Dec 18

$m 30 Jun 19

$m Continuing operations Cash and cash equivalents 16.2 15.8 Trade and other receivables 32.8 41.9 Inventories 0.7 0.7 Property, plant and equipment 75.5 93.0 Tax assets 6.4 8.1 Investments in non-controlled entities 0.1 1.8 Right of use assets(2) - 150.0 Intangible assets and goodwill 203.9 242.1 Other assets 47.6 20.0 Total assets 383.2 573.6 Trade and other payables 20.3 28.6 Deferred revenue 3.8 8.6 Provisions 11.3 3.5 Current tax liabilities 2.3 4.8 Deferred tax liabilities 5.7 6.0 Lease liability(2) - 163.1 Deferred and contingent consideration 7.5 10.4 Loans and borrowings (net of capitalised borrowing costs)(3) 170.0 169.8 Other liabilities 10.1 37.7 Total liabilities 231.0 432.6 Net assets 152.2 141.0

12 To include contributions from the acquisition of TLA Australia. 13 Prior to the impacts of AASB 16 – Leases.

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QMS – statement of financial position(1)

31 Dec 18

$m 30 Jun 19

$m Discontinued operations (QMS NZ)(4) Assets held for sale 80.9 128.2 Liabilities held for sale 14.3 57.1 Net assets 66.6 71.2 Total net assets 218.7 212.2 Non-controlling interests 0.3 0.4 Net assets attributable to QMS shareholders 218.4 211.7 Note: 1 Rounding differences may exist. 2 QMS has adopted AASB 16 – Leases from 1 January 2019. As a result, QMS, as a lessee, has

recognised a right of use asset representing its right to use the underlying asset and lease liabilities representing its obligation to make lease payments.

3 Includes $1.1 million and $0.9 million of unamortised capitalised borrowing costs as at 31 December 2018 and 30 June 2019 respectively.

4 Net assets associated with the QMS NZ business which merged with MediaWorks on 3 September 2019.

Source: QMS.

98 In respect of the above, we note that:

(a) Property, plant and equipment – the carrying value of QMS’s property, plant and equipment from continuing operations is as follows:

QMS – property, plant and equipment(1)

31 Dec 18

$m 30 Jun 19

$m Land and buildings 5.6 - Plant and equipment 66.9 89.8 Fixtures and fittings 0.4 0.3 Under construction 2.6 2.9 Total property, plant and equipment 75.5 93.0 Note: 1 Rounding differences may exist.

Plant and equipment predominantly represents QMS’s physical advertising signage assets (across all formats) which are carried at historical cost less accumulated depreciation and impairment. As new static and digital billboard sites are developed, the costs to construct (including permits, physical structure and LED panels) are capitalised. These structures are subsequently classified as plant and equipment and depreciated when installed and ready for use

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(b) Intangible assets and goodwill – the composition of QMS’s intangible assets from continuing operations is set out below:

QMS – intangible assets and goodwill(1)

31 Dec 18

$m 30 Jun 19

$m Goodwill 95.4 130.8 Site leases 99.5 101.2 Other 9.0 10.1 Total intangible assets and goodwill 203.9 242.1 Note: 1 Rounding differences may exist.

Goodwill is tested annually for impairment using the value in use method. As at 31 December 2018, a post-tax discount rate of 10.5% and 11.0% was adopted for impairment testing purposes for QMS Australia and QMS Sport respectively

(c) Deferred and contingent consideration – the composition of QMS’s deferred and contingent consideration from continuing operations is set out below:

QMS – deferred and contingent consideration(1)

31 Dec 18

$m 30 Jun 19

$m Site acquisitions 5.2 4.4 Stella Vista acquisition - 3.8 QMS Sport remaining 20% shareholding 2.0 2.0 Digital Commons put option 0.4 0.2 Total deferred and contingent consideration 7.5 10.4 Note: 1 Rounding differences may exist.

Site acquisitions relates to the acquisition of individual site leases. The remaining deferred and contingent consideration relates to the acquisitions of subsidiaries

(d) Net debt – the composition of QMS’s net debt (excluding deferred and contingent consideration) from continuing operations is set out below:

QMS – net debt(1)

31 Dec 18

$m 30 Jun 19

$m Cash and cash equivalents (16.2) (15.8) Bank loans(2) 100.4 100.8 Corporate bonds(2) 70.0 70.0 Finance lease liabilities 0.7 0.0 Net debt 154.9 155.0 Note: 1 Rounding differences may exist. 2 Excludes unamortised borrowing costs.

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As at 30 June 2019, QMS had total banking facilities of $113.4 million (which includes a $6.0 million bank guarantee facility) which were partially drawn to $100.6 million as at 30 June 2019. The facility expires in September 2020 and attracts a floating interest rate of 2.1% above the Bank Bill Swap Bid rate (BBSY). QMS uses derivative financial instruments to hedge a portion of its interest rate exposure arising from the floating rate debt facility held (these derivatives are classified as “Other liabilities” in the balance sheet).

Corporate bonds relate to $70 million senior unsecured notes which were issued by QMS in November 2017. The notes have a five year duration and attract a fixed coupon of 7.00% per annum.

99 In addition to the above, we note that QMS had a number of off-balance sheet contingent liabilities:

(a) associated with the proposed merger of QMS NZ and MediaWorks were success based advisor fees that were dependent on the completion of the merger. Upon completion of the merger (which occurred on 3 September 2019) QMS was liable to pay an additional $2.5 million in advisor fees

(b) in addition to the above, as at 30 June 2019, QMS was engaged in legal proceedings against Manboom Group and Techfront Australia which may result in damages being payable, the extent to which was unable to be quantified as at the reporting date. Further details are set out at Note 17 of the QMS 30 June 2019 Half Year Report.

Share capital and performance 100 QMS has some 344.738 million fully paid ordinary shares on issue.

101 In addition, QMS has approximately 8.055 million outstanding performance rights which have been issued to (eligible) key management personnel and other selected senior executives under QMS’s long term incentive program (LTIP).

QMS – performance rights Performance measurement period Tranche Number Grant date Start date Years Vesting date FY18 3,222,423 29 Jun 18 1 Jul 17 3 30 Jun 20 FY19 3,314,825 28 Mar 19 1 Jul 18 3 30 Jun 21 CY19 1,518,006 1 Jul 19 1 Jul 19 3 30 Jun 22 Source: QMS.

102 The performance rights do not carry any voting or dividend rights and each (vested)

performance right converts to one QMS share with no consideration payable. The number of performance rights that vest depends on the extent to which the performance hurdles have been satisfied over the three year period ending on the vesting date. Of the total number of performance rights granted:

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(a) 50% are subject to the satisfaction of a relative total shareholder return (TSR) performance hurdle (relative TSR performance is measured against the S&P / ASX Small Industries Index)

(b) 50% are subject to the satisfaction of an earnings per share (EPS) growth performance hurdle specified at the time of grant.

103 Unless the QMS Board determines otherwise, unvested performance rights automatically lapse in the event the LTIP participant ceases to be an employee of QMS. All performance rights that fail to vest also immediately lapse.

104 In relation to a takeover, or scheme of arrangement (or other change of control event) concerning QMS, the QMS Board has the discretion as to how to treat the unvested performance rights.

Substantial shareholders 105 As at 20 November 2019, there were six substantial shareholders in QMS (excluding

Quadrant, refer paragraph 106). The substantial shareholders (based upon the substantial shareholder and director interest notices released to the ASX) were as follows:

QMS – substantial shareholders(1)(2) Shares held Million % interest Wenvale Pty Ltd ATF Barclay Nettlefold Family Trust 46.2 13.4 Goldman Sachs 31.2 9.1 Ellerston Capital 29.2 8.5 Sand Grove Capital Management 23.2 6.7 Burgundy Asset Management 22.5 6.5 UBS Group AG 18.0 5.2 Note: 1 Rounding differences may exist. 2 Excludes Quadrant, refer paragraph 106. Source: Notice of substantial shareholder notices and change in director interest notices released to the ASX.

106 Whilst Quadrant is also (legally) considered a substantial shareholder, this is only because it

has a relevant interest in the shares held by the entities associated with Mr Nettlefold and Mr O’Neill (i.e. Quadrant does not own any QMS shares in its own right).

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Share price performance 107 The following chart illustrates the movement in the share price of QMS from 1 January 2018

to 23 October 201914:

QMS – share price history(1) 1 January 2018 to 23 October 2019

Note: 1 Based on closing prices. The All Ordinaries Index has been rebased to QMS’s last traded price on 1 January 2018, being $1.00. Source: Bloomberg.

108 From 1 January 2018 through to 23 October 2019 (i.e. the last trading day prior to press

speculation regarding potential takeover interest in QMS) QMS generally underperformed the All Ordinaries Index. Key market sensitive announcements during the period are as follows:

(a) 16 February 2018 – QMS announced its results for the six months to 31 December 2017. Revenue increased by 25% and underlying EBITDA increased 27%. QMS also provided FY18 EBITDA guidance of $44 million to $46 million

(b) 30 August 2018 – QMS announced that it had reached an agreement to acquire 90% of TGI / TGIE for $40 million

(c) 31 August 2018 – QMS released its results for FY18. Revenue increased 21% and underlying EBITDA increased by 22% to $45.8 million (in line with prior guidance). QMS also provided FY19 EBITDA guidance of $56 million to $58 million which included the impacts of the TGI / TGIE acquisitions

(d) 29 November 2018 – QMS announced that it had entered into a Heads of Agreement with MediaWorks for the proposed merger of its QMS NZ business with MediaWorks independent radio, TV and digital business

(e) 10 December 2018 – QMS announced that it had finalised terms for the proposed merger of QMS NZ and MediaWorks

14 Being the last trading day prior to press speculation regarding potential takeover interest in QMS.

$0.50

$0.65

$0.80

$0.95

$1.10

$1.25

Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19

QMSAll Ordinaries Index

(a) (b)(c)

(d)

(e)

(f)

(g)

(h)(i)

(j)

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(f) 19 December 2018 – QMS responded to media speculation, acknowledging that it was in preliminary discussions to explore the potential acquisition of TLA Australia

(g) 28 February 2019 – QMS released its results for the six months to 31 December 2018. Revenue increased 9% and underlying EBITDA was $22.7 million

(h) 30 July 2019 – QMS announced that it had received consent from the NZ OIO to undertake the strategic merger of its QMS NZ business with MediaWorks

(i) 9 August 2019 – QMS announced the acquisition of TLA Australia / Stride for $32.7 million, which would be partially funded by an institutional placement to raise approximately $12 million. QMS also announced that EBITDA for QMS Sport for the six months to 30 June 2019 was expected to be between $11.0 million and $11.5 million, which exceeded the $9 million EBITDA guidance provided in February 2019

(j) 23 August 2019 – QMS released its results for the six months to 30 June 2019. Revenue increased 24% to $130.5 million and underlying EBITDA increased to $33.9 million.

Liquidity in QMS shares 109 The liquidity in QMS shares based on trading on the ASX over the 12 month period prior to

23 October 201915 is set out below:

QMS – liquidity in shares No. of shares WANOS(1) Implied level of liquidity traded outstanding Period(2) Annual(3) Period Start date End date 000 000 % % 1 month 24 Sep 19 23 Oct 19 19,880 344,505 5.8 69.2 3 months 24 Jul 19 23 Oct 19 54,964 339,093 16.2 64.8 6 months 24 Apr 19 23 Oct 19 89,911 332,994 27.0 54.0 1 year 24 Oct 18 23 Oct 19 163,657 329,489 49.7 49.7 Note: 1 Weighted average number of shares outstanding (WANOS) during relevant period. 2 Number of shares traded during the period divided by WANOS. 3 Implied annualised figure based upon implied level of liquidity for the period. Source: Bloomberg and LEA analysis.

110 QMS shares are relatively liquid (particularly given that large parcels of stock have

historically been closely held, for example by Mr Nettlefold and his associated entities and by Ellerston Capital) and the implied level of liquidity has improved during the last year.

15 Being the last trading day prior to press speculation regarding potential takeover interest in QMS.

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IV Industry overview

Introduction 111 QMS is a participant in the media industry across a number of jurisdictions, with the core

business operating in the out-of-home sector of the media industry in Australia. QMS also has an exposure to the NZ out-of-home, television, and radio sectors (via its investment in MediaWorks), and has recently entered the global sports media industry. This section of the report provides an overview of each media segment that QMS operates in, including key trends and growth drivers of advertising spend, the primary source of revenue for industry participants.

Australian media industry 112 The Australian media industry is made up of six primary sectors, being free to air television

and subscription television (together “TV”), print, radio, online (including digital online such as mobile and handheld technology), cinema and out-of-home, all of which compete for advertiser budgets (noting the lines between these sectors continue to be less clear with advances in technology, changes and interconnectivity between forms). Industry revenue is primarily driven by macroeconomic factors including business and consumer confidence, the domestic and international geo-political environment and the overall state of the economy.

113 Key themes in the advertising industry over the last 10 years have included the continued rise of online advertising (and to a much lesser extent, out-of-home advertising), at the expense of traditional forms of advertising mediums, in particular print and TV. This is illustrated in the chart below, which shows a proportional breakdown of total advertising revenue by media type for the CY13 to CY18 period:

Australian advertising spend by media(1)

Note: 1 TV includes metro and regional from CY13 to CY15 and advertising revenue from video on demand from CY16. 2 Print reporting changed in 2017 to include digital and classifieds advertising revenue which was previously excluded. 3 Source: Outdoor Media Association (OMA) which sourced its data from the Commercial Economic Advisory Service of Australia

(CEASA).

-

20%

40%

60%

80%

100%

CY13 CY14 CY15 CY16 CY17 CY18

Online TV Print Radio Out-of-home Cinema(1) (2)

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114 Online advertising represented 28.4% of the total advertising spend in CY13, which had grown to 48.1% by CY18. In CY15, online advertising overtook TV to become the largest form of advertising in Australia. Out-of-home advertising has also increased its share of advertising spend, rising from 4.8% in CY13 to 6.2% in CY1816. The growth is primarily attributable to investment by out-of-home advertising suppliers in advertising inventory, in particular the rollout of digital assets. Over the same period TV, which traditionally accounted for the largest proportion of industry advertising, decreased from 35.0% to 24.2% of advertising spend and print decreased from 22.0% to 12.7%.

115 The Australian Competition and Consumer Commission (ACCC) on 26 July 2019 published a Digital Platform Inquiry report to consider the impact of online search engines, social media and digital content aggregators (digital platforms) on competition in the media and advertising services market. The report outlined that digital platforms have taken an increasing share of advertising expenditure with a significant portion of the increase in online advertising revenue from 2014 to 201817 going to Google and Facebook.

116 We note that the Australian media industry (in total) experienced slow growth in the first half of CY19 due to decreased consumer and business confidence and increasing competition from digital advertising players (e.g. Facebook and Google) and this has led to multiple major media company earnings downgrades. As stated by Seven West Media Group Chief Executive Officer James Warburton:

“FY19 was a challenging financial year from an advertising markets perspective driven by political uncertainty, the impact of the royal commission on financial services advertising spend and generally subdued economic conditions.”18

117 This view was further echoed by Nine Entertainment Co. Holdings Ltd:

“the prevailing weakness in consumer sentiment in Australia has manifested itself in weak trading conditions for many consumer facing businesses, and general softness in the overall advertising market. Advertising from pretty much every major advertising category was weak in the September quarter particularly from auto, Government, domestic banks and gambling.”19

Out-of-home advertising

Overview 118 Out-of-home advertising is strategically placed where people live, shop, socialise, travel and

work. It can be used to target a broad audience (e.g. roadside billboards and street furniture) or can be highly focused to address a targeted audience to facilitate one-on-one consumer engagement (e.g. retail environments, targeted event campaigns on all out-of-home formats).

16 According to CEASA data. 17 Source: ACCC (2019): Digital Platform Inquiry report. 18 Source: Seven West Media 2019 Annual General Meeting Address dated 13 November 2019. 19 Source: Nine Entertainment Co. Current Trading Outlook dated 12 November 2019.

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MOVE20 estimates that out-of-home advertising in Australia has the capacity to reach 12.7 million people per day.

119 Growth in out-of-home advertising is driven by three key factors:

(a) physical presence – given its physical presence, out-of-home advertising is one of the last true mass broadcast mediums which is eye-catching to passers-by and has continued to grow audience and revenue. This contrasts with the increasing audience fragmentation found in other types of traditional media such as TV and radio, where advertising can more easily be turned off, skipped, or fast forwarded by consumers

(b) growing audience – the growing size of out-of-home advertising audiences, which is in contrast to the declining audiences experienced by other types of traditional media such as newspapers and magazines. MOVE estimates that out-of-home audiences have increased by 23% over the seven years to 2017 and increased by 2.2% in 2018. This is largely attributable to increased urbanisation, growth in motor vehicle usage as well as higher foot traffic into out-of-home environments such as shopping centres and airports; and

(c) digital out-of-home (DOOH) – the increasing use of DOOH advertising to provide highly targeted messages often provides additional engagement opportunities via the use of interactive touch screens, mobile integration and new applications. DOOH advertising also provides advertisers with the ability to change content based on factors such as local weather conditions or to coincide with a major sporting event, to improve the relevance of a campaign.

120 Out-of-home advertising is seasonal, with approximately 30% of revenue typically generated in the final quarter of the year21. This is primarily due to higher advertising spend in the lead up to the Christmas period. Most revenue is understandably generated in the two most populated states of Australia, with New South Wales and Victoria accounting for circa 54.7% and 46.0% of sector revenue for the nine months ending 30 September 2019 respectively22.

121 The chart below sets out net revenue23 for the out-of-home advertising sector for the 10 years to CY18 and the last 12 months to 30 September 2019 (LTM19):

20 Measurement of Outdoor Visibility and Exposure (MOVE). 21 Source: OMA. 22 Based on revenue by media location. Source: OMA. 23 Net of agency commissions.

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Out-of-home net revenue CY07 to LTM19(1)

Note: 1 OMA generates performance reporting for the out-of-home sector through the compilation of revenue results and share of advertising

spend for its members, which comprised 80% of the industry. Historical data to CY12 has been restated by the OMA for changes in OMA membership so as to enable a year-on-year (YOY) comparison. The data for years prior to CY12 have not been restated and may not be directly comparable.

Source: OMA.

122 Over the 11.8 years to LTM19 out-of-home advertising net revenue (for members of the

OMA) has exhibited a compound annual growth rate (CAGR) of 7.0%24 to reach $943 million. This growth is primarily attributable to the sector’s investment in, and subsequent take up and expansion of, DOOH advertising. This is consistent with the experience in overseas markets, where DOOH has generally been the fastest growing format of out-of-home advertising.

123 Revenue growth has generally declined since the high levels achieved in CY15, however made a brief recovery in CY18, reporting YOY revenue growth of 10.8%. Revenue growth has slowed in recent periods however, with YOY growth of 5.4% and 5.0% reported in 1Q19 and 2Q19 respectively, and a slight decline of 0.9% reported in 3Q19. This is reflective of, inter alia, very strong results reported for the prior period, as well as a decrease in overall advertiser confidence in Australia.

DOOH advertising 124 DOOH utilises strategically placed digital signage displays to reach consumers with highly

targeted messages, enabling businesses to purchase an advertisement at a specified location for a particular period of the day and the ability to change the content being displayed according to external factors such as local weather conditions or major sporting events, to ensure the optimal audience is targeted and advertising occurs at a relevant time. DOOH (particularly street furniture / retail) often also provides additional engagement opportunities via the use of interactive touch screens, mobile integration and other applications.

24 Based on OMA reported figures, noting that data for years prior to CY12 may not be directly comparable to CY17.

(25.0%)

(12.5%)

-

12.5%

25.0%

37.5%

-

$200m

$400m

$600m

$800m

$1,000m

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 LTM19

Out-of-home revenue (LHS)Annual growth (RHS)

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125 The out-of-home sector stands to benefit from the continued adoption of digital technologies, which present numerous revenue opportunities, including (noting that the degree of digital interactivity varies by DOOH format):

(a) increased asset utilisation – greater asset utilisation from high-traffic sites with digital technology allowing for multiple advertisements on a single site, time-of-day advertising and contextual advertising opportunities

(b) increased addressable market – increased ability to access time-sensitive advertising spend including sale or limited time offers that were previously inaccessible to static out-of-home signage

(c) advanced measurement and tracking – interactive digital campaigns enhance the ability of out-of-home operators to collect data about end customers (on an anonymous basis) and gain a deeper understanding of their background and habits in order to develop better methods for targeting and engaging with them, giving advertisers greater clarity on their return on investment

(d) increased engagement and interactivity (particularly for street furniture / retail) – including interactive touch screens and mobile integration, which allow advertisers to customise their messages to a specific location, time of day, or special event. Digital innovation using wi-fi, QR codes, mobile technology and motion and gesture recognition also allow instant retail transactions, free product trials and other consumer experiences, such as playing a game; and

(e) content – digital screens allow for the display of more engaging content and also for the display of contextually relevant content (e.g. news, weather, sport) that helps increase a consumer’s engagement with the advertising panel.

126 There are also several favourable trends driving digital growth, including lower transaction costs for advertisers25 and improved digital technology and efficiencies (for example, the use of cost-effective light-emitting diodes or improved software for creating, deploying and scheduling advertisements).

127 The following chart illustrates the rise of DOOH advertising as a percentage of total out-of-home net revenue since CY12 (the first available material data):

25 When customers move to DOOH the traditional installation costs are replaced with an upload fee which is much

lower than a production and installation fee.

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DOOH advertising net digital revenue as a percentage of total out-of-home revenue(1)(2)


spend for its members, which comprise 80% of the industry. 2 This chart excludes digital revenue earned by non-traditional out-of-home operators (online / mobile) that are able to penetrate the

traditional out-of-home environment. Source: OMA.

128 In the 6.8 years to LTM19, DOOH advertising exhibited a CAGR of 47.2%, which as shown

above represents the vast majority of growth in the out-of-home advertising sector. Over this period, DOOH advertising net revenue has grown from $38.1 million (7.5% of the total in CY12) to $519.0 million (55.0% of the total in LTM1926), with this trend expected to continue as advertisers are attracted to the DOOH medium.

Key categories 129 Categories or products within the out-of-home advertising sector can be grouped in a number

of ways, noting there can be crossover between and within categories. The table below summarises the categories in five sub categories, according to the OMA classification:

26 DOOH represented 55.0% of net out-of-home revenue for 3Q19.

-

12%

24%

36%

48%

60%

-

$120m

$240m

$360m

$480m

$600m

CY12 CY13 CY14 CY15 CY16 CY17 CY18 LTM19

Digital Non digital Digital % total

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Out-of-home advertising categories Category Environment Formats Key participants(1) Roadside (billboards)

Advertising that either appears on the side of a road or near a road, whether on a building, in a transport corridor or precinct or on private land

• Different sized billboards including: − supersites − spectaculars − 24 Sheet

• JCDecaux • oOh!media • QMS • Claude Group

Roadside (other) Advertising that appears on the side of, or near, a footpath along road corridors or exterior of public transportation vehicles

• Street furniture • Bus / tram shelters • Bus / tram exteriors • Kiosks and phone

booths • Taxi exteriors • Free standing panels • Mobile billboards

• oOh!media • JCDecaux • QMS • Claude Outdoor

Transport (including rail, taxi, tram and bus)

Advertising that appears on the interior of public transportation vehicles, railway stations

• Rail platform and concourse

• Train interiors and exteriors

• Bus interchange • Bus / tram interiors

• oOh!media • JCDecaux • Claude Group

Airport Advertising that appears on the exterior / interior of airports

• Airport externals and precinct

• Airport internals • Airport lounges

• JCDecaux • oOh!media • QMS

Retail / lifestyle / other

Advertising that appears in shopping centres, malls, universities, office tower foyers and other place based environments

• Shopping centres and malls

• Office buildings and lifts

• Place based media (indoor social sport centres, universities, pharmacies, health clubs, clinics, bars and clubs, cafés, medical centres)

• Cinemas

• oOh!media • Claude Group • Val Morgan Outdoor

Note: 1 Other participants in Roadside (billboards) include GOA, Paradise Outdoor, Bishopp Outdoor and

Apparition Media. Other participants in Transport include GoTransit, Moove Media, Nonstop Media, S&J Media Group and GOA. Other participants in Airport include Paradise Outdoor and Bishopp Outdoor. Other participants in Retail / lifestyle / other include Nonstop Media, Shopper Media, Stadia Media, Brandspace, and MCN.

Source: OMA and QMS.

130 The chart below summarises the breakdown of out-of-home sector net revenue by category

for the seven years to CY18 and 12 months to 30 June 2019 (FY19)27:

27 Revenue by category was not available for the three months ended 30 September 2019.

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Out-of-home advertising net revenue by category(1)


spend for its members, which comprise 80% of the industry. Historical data to CY12 has been restated by the OMA for changes in OMA membership so as to enable a YOY comparison. The data for years prior to CY12 have not been restated and may not be directly comparable.

Source: OMA.

131 Over the 7.5 years to FY19 the out-of-home advertising sector exhibited a CAGR of 9.0%,

with roadside (billboards), retail, and transport (including airports) categories all exceeding this sector growth (CAGRs of 11.0%, 10.0% and 11.7% respectively). Roadside (other), with a CAGR of 5.1% for the 7.5 years to FY19, was the only category recording below out-of-home sector growth.

132 As mentioned in paragraph 123, growth in overall out-of-home revenue has slowed in recent periods, with YOY growth of 5.4% and 5.0% reported for 1Q19 and 2Q19 respectively. This was driven by a considerable decline in growth for roadside (billboards) advertising, which reported a decline in semi-annual YOY revenue of 1.7% in 1HY19, a significant contrast to the 15.6% YOY growth reported for 1HY18. Over the same period, transport (including airports), and roadside (other) reported revenue growth of 18.3% and 7.7% respectively, whilst retail revenue declined slightly by 0.4%.

Users of out-of-home advertising 133 In CY18, the top 10 industries utilising out-of-home advertising services accounted for 74.6%

of total sector net revenue, as shown in the table below:

-

$77m

$154m

$231m

$308m

$385m

CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 FY19

Roadside (billboards) Roadside (other)Transport (including airports) Retail / lifestyle / other

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Primary users of out-of-home advertising CY18

Industry Major customers $m % Retail 132.5 14.3 Motor vehicles Nissan Motor Company (Australia) 95.6 10.3 Entertainment and leisure Foxtel, Stan Entertainment, Netflix 83.6 9.0 Finance CBA, ANZ, NAB 76.5 8.3 Communications Optus 68.7 7.4 Food Mondelez International, McDonald’s, Woolworths 55.2 6.0 Travel / accommodation Uber 51.1 5.5 Media Nine, Seven, news.com.au 43.4 4.7 Gambling / gaming Unibet Australia, Sportsbet, Neds 42.8 4.6 Beverages – alcoholic Carlton & United Breweries 42.1 4.5 Total 691.5 74.6 Source: OMA and QMS.

134 Showing the breadth of the customer base, the top 10 individual out-of-home advertising

customers in CY18 accounted for just 12.6% of sector net revenue in CY18, with the largest five of these being Unibet Australia, with 1.6% of sector net revenue, McDonalds (1.5%), Woolworths (1.5%), Nissan (1.4%) and Optus (1.3%).

Out-of-home advertising value chain 135 The following diagram shows the value chain in a typical out-of-home advertising transaction,

noting that at any point, a participant in the supply chain can skip a step and engage directly with another participant:

Value chain of out-of-home advertising industry

Source: QMS Prospectus.

136 Advertisers typically allocate a budget to total advertising and will then work with media

agencies to allocate across different media sectors as appropriate for each advertiser’s target audience demographic or campaign objective. Media agencies can work as intermediaries between the advertiser and out-of-home advertising operators and are responsible for purchasing out-of-home advertising on behalf of their clients.

Advertiser

• Confirms budget allocation, timing and markets for a campaign

• The objectives would be set around specific metrics such as audience levels and targets

Media agency

• Selects the appropriate media channels and prepares a brief with details from which the media operator is to respond. The allocation of an advertising budget to different media types can and does regularly change

• Discussions and negotiations commence with bookings confirmed

Out-of-home advertising operator

• Responds to a brief or proactively approaches an agency to satisfy the objectives of a campaign

• Provides a recommendation of formats, weights and costs together with support data such as MOVE and internal research

Landlord / asset owner

• Leases site to outdoor advertising operator via fixed rent, revenue share rent, or a combination of fixed rent plus revenue share rent

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137 The performance of out-of-home advertising operators is heavily reliant on media agencies, with approximately 80% to 90% of sector revenue generated through media agencies, particularly the top five agencies, which account for some 80% of the market. The remaining 10% to 20% is generated through direct sales to customers28. Media agencies receive commissions (typically 10%) from out-of-home advertising operators, which vary on an agreement by agreement basis.

138 Out-of-home advertising operators typically enter into a lease or licence agreement with the owner of the location for use of the site29. Lease agreements and licenses vary in tenure, but can be for multiple year periods and may be renewed prior to expiry. However, landlords typically test the market and competitive rates when licenses are approaching expiry and many leases / licence agreements go to a formal tender process. Therefore, there is the risk that out-of-home advertising operators will not be able to renew contracts on similar or favourable terms, if at all. Most transit and Roadside (other) contracts are with municipalities and government entities which are required for probity reasons to undertake a competitive bidding process at each renewal. The inability to renew a lease or licence on comparable terms is a key risk to out-of-home advertising operators.

Regulation 139 The Australian out-of-home media sector is subject to regulation at the federal, state and local

government level, with regulation focused on site ownership, development approvals, advertising structure and content displayed.

140 The approval process for a new out-of-home advertising site in roadside locations is regulated by various levels of government and government agencies. Construction of billboard advertising generally requires development approval and building approval as well as assessments of major variables during the planning and approval of a new site, such as the aesthetic and environmental impact, road safety and heritage requirements. Roadside out-of-home advertising often requires a separate approval required from the relevant state government’s road and safety authority and an independent lighting impact assessment.

141 Once approved, permits are typically issued in most states on a 10 to 15 year basis and are further protected by existing use rights legislation. Development approval can also be transferred to a new site owner. There are, however, some local governments in Australia that limit approvals before reapplication to a maximum of 15 years.

142 Content of out-of-home advertising is regulated through a combination of self regulation schemes through the OMA, the Australian Advertising Standards Board and Federal Government laws concerning misleading and deceptive conduct. The content displayed in out-of-home advertising is not owned by the operator and as such any complaints under policy or legislation are generally directed against the advertiser responsible for the advertisement.

28 Albeit this split moves from period to period. 29 Many landlords are large and sophisticated and often lease their sites via tender processes, whilst other site owners

will negotiate on an individual basis.

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Outlook 143 As a component of the broader Australian media industry, the out-of-home sector has

exhibited solid growth rates in recent years. This is largely due to investment in inventory, the increasing use of digital media displays and interactive technology, growing audience sizes and lower levels of audience fragmentation than those experienced by other mass broadcast advertising mediums and the use of data and analytics to support the decision making process.

144 Whilst advertising market conditions are expected to remain challenging in the short-term, the medium to longer-term outlook for the out-of-home advertising sector remains positive, underpinned by:

(a) ongoing investment in DOOH inventory (b) the growing number of applications for DOOH technology which are likely to be

bolstered by increasing availability of relevant data sources (c) ongoing audience fragmentation in other mass broadcast advertising mediums; and (d) expansion into new out-of-home advertising locations, which has the potential to grow

audience sizes and increase the relative attractiveness of the out-of-home advertising sector (particularly through the use of data analytics30)

(e) expansion of MOVE to incorporate an audience measurement system for DOOH.

145 Out-of-home advertising as a proportion of total advertising expenditure in Australia has steadily increased to around 6% in CY18 and is expected to continue to gain market share over the coming years31, noting that the current share of expenditure remains below some comparable overseas markets. For example, the out-of-home sector in the UK and France represents 8% and 12% respectively of total advertising expenditure:

30 Which provide advertisers with more sophisticated audience targeting capabilities, the ability to better measure

audience engagement and obtain specific campaign return on investment information. 31 oOh!Media Limited (oOh!Media) 1HY19 results presentation.

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2016 estimated out-of-home share of total advertising main markets

Source: FEPE International presentation June 2016.

146 In addition to the above, PricewaterhouseCoopers estimates that the Australian out-of-home

sector will grow at a CAGR of 8.4% over the five year period to and including CY23. Growth over this period is largely attributable to DOOH, while physical out-of-home advertising is expected to decline32.

New Zealand media industry 147 The NZ media industry is segmented similar to Australia, with primary sectors being online,

TV, print, radio, out-of-home, and cinema. The advertising industry has undergone the same transformation observed in Australia, with the market share for the online and out-of-home sectors increasing relative to TV and print, whilst radio has remained relatively flat, as shown below:

32 www.pwc.com.au/industry/entertainment-and-media-trends-analysis/outlook/out-of-home.html.

20%

17%

12% 12%

8%7% 7%

6% 6% 6% 6%5%

4%

-

5%

10%

15%

20%

25%

Japan South Korea

France China UK Mexico Spain Australia Brazil Canada Germany India US

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NZ advertising spend by media

Note: 1 Print includes newspaper, magazine, addressed mail and unaddressed mail. Source: Advertising Standards Authority Industry Revenue reports.

148 The out-of-home segment has grown at a CAGR of 14.6% for the four years to CY18, and

increased its market share from 3.4% to 5.4% of total NZ media advertising turnover. Within the sector, DOOH has grown its share of out-of-home revenue substantially over the last two years, increasing at a CAGR of 44.1% and overtaking static out-of-home as the primary medium for out-of-home advertising.

149 As mentioned in Section III, QMS has exposure to the NZ radio industry via its investment in MediaWorks. The NZ radio segment, measured in terms of advertising turnover, has been relatively subdued, with little change in the total spend or market share over the four years to CY18. Notwithstanding this, radio represents an important audience for advertisers in NZ, with commercial radio penetration reaching 69.7% as at 30 June 201833. The sector is highly concentrated, with MediaWorks and NZ Media and Entertainment (NZME) representing over 85% of the commercial radio audience for the three years to LTM19, as shown below:

33 Calculated as the total cumulative audience from the Q218 GfK Total NZ Commercial Radio Survey as a portion of

the NZ population as per the latest data reported by Stats Tatauranga Aotearoa (being as at 30 June 2018).

-

20%

40%

60%

80%

100%

CY14 CY15 CY16 CY17 CY18

Online TV Print Radio Out-of-home Cinema(1)

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NZ commercial radio station share

Note: 1 Represents stations owned and operated by MediaWorks including Breeze, Edge, George FM, Magic (includes Radio Dunedin), Mai,

More FM (includes More FM Rodney), Rock, The Sound. 2 Represents stations owned and operated by NZME including Coast, Flava, Hokonui, Mix, Newstalk ZB, Radio Hauraki, Radio Sport,

The Hits, ZM, BBC (Auckland). Source: Growth from Knowledge (GfK) Total NZ Commercial Radio Survey quarterly reports.

Global sports media industry 150 The Global sports media market comprises media rights (which includes advertising rights),

sponsorships, gate takings and merchandise, which in aggregate is worth over US$200 billion. The industry has experienced steady growth recently, which is expected to continue, with total market value anticipated to grow at a CAGR of 5.9% for the four years to CY22, as shown below:

Global sports media market size US$bn

Source: QMS which sourced its data from the Global Media Report 2018, published by SportBusiness Consulting.

-

20%

40%

60%

80%

100%

3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

MediaWorks Combo NZME Combo Other(1) (2)

-

60

120

180

240

300

CY14 CY15 CY16 CY17 CY18 CY19F CY20F CY21F CY22F

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151 Live sports coverage is one of the few remaining forms of entertainment that is viewed in real

time, with advertisers willing to pay a premium to reach a broad audience across multiple locations and demographics. Sponsors pay for exclusive media rights for major events and competitions, which may include the advertising rights across one or multiple formats34 including:

(a) in-game television advertising – which is typically controlled by the broadcasting network that owns the television rights, and sells advertisement time during breaks in live coverage

(b) in-stadium advertising – static signage and digital screens (and the respective advertising rights), which are the property of stadium owner, the code, sporting governing body, or the club and are subject to commercial arrangements with media companies

(c) in-broadcast digital displays – LED perimeters and on-field virtual displays including 3D carpets35 that can be altered digitally to display local advertisements for the same broadcasted event in different regions. Technology providers partner with rights owners (usually the code, club or stadium owners) to distribute in-broadcast advertising.

152 The addressable market for advertising is directly correlated to the size of media rights for sports, which is valued at approximately $US50 billion. In CY18, the top 10 sports accounted for 92.5% global media rights market, with largest five of these being Soccer (40.6%), American Football (15.6%), Basketball (8.6%), Baseball (8.6%) and US College Sports (6.3%), as shown below:

Top 10 sports’ share of global media rights value

* Represents the sports in which QMS Sports operates. Source: QMS which sourced its data from the Global Media Report 2018, published by SportBusiness Consulting.

34 The QMS Sport business concentrates predominantly on in-stadium and in-broadcast digital display advertising. 35 Virtual 3D carpets refer to static advertisements that are digitally projected onto the field to give the appearance of

being physically present on the field.

40.6%

15.6%8.6%

7.4%

6.3%

3.4%

3.0%2.9%

2.5%2.2%

7.4%

Soccer

American Football

Basketball

Baseball

US College Sports

Motor Sports

Cricket

Ice Hockey

Golf

Multi-Sport Events

Other

*

*

*

*

*

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153 Whilst soccer represents the largest portion of the global market, it is fragmented over a number of leagues across multiple regions worldwide. American football, however, comprises almost entirely the National Football League (NFL) in the US, and represents the highest valued media rights of any single sporting league in the world, worth approximately US$7.7 billion.

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V Valuation methodology

Valuation approaches 154 RG 111 outlines the appropriate methodologies that a valuer should consider when valuing

assets or securities for the purposes of, amongst other things, share buy-backs, selective capital reductions, schemes of arrangement, takeovers and prospectuses. These include:

(a) the discounted cash flow (DCF) methodology (b) the application of earnings multiples appropriate to the businesses or industries in which

the company or its profit centres are engaged, to the estimated future maintainable earnings or cash flows of the company, added to the estimated realisable value of any surplus assets

(c) the amount that would be available for distribution to shareholders in an orderly realisation of assets

(d) the quoted price of listed securities, when there is a liquid and active market and allowing for the fact that the quoted market price may not reflect their value on a 100% controlling interest basis

(e) any recent genuine offers received by the target for any business units or assets as a basis for valuation of those business units or assets.

155 Under the DCF methodology the value of the business is equal to the net present value (NPV) of the estimated future cash flows including a terminal value. In order to arrive at the NPV the future cash flows are discounted using a discount rate which reflects the risks associated with the cash flow stream.

156 Methodologies using capitalisation multiples of earnings or cash flows are commonly applied when valuing businesses where a future “maintainable” earnings stream can be established with a degree of confidence. Generally, this applies in circumstances where the business is relatively mature, has a proven track record and expectations of future profitability and has relatively steady growth prospects. Such a methodology is generally not applicable where a business is in start-up phase, has a finite life, or is likely to experience a significant change in growth prospects and risks in the future.

157 Capitalisation multiples can be applied to either estimates of future maintainable operating cash flow, EBITDA, earnings before interest, tax and amortisation, EBIT or NPAT. The appropriate multiple to be applied to such earnings is usually derived from stock market trading in shares in comparable companies which provide some guidance as to value and from precedent transactions within the industry. The multiples derived from these sources need to be reviewed in the context of the differing profiles and growth prospects between the company being valued and those considered comparable. When valuing controlling interests in a business an adjustment is also required to incorporate a premium for control. The earnings from any non-trading or surplus assets are excluded from the estimate of the maintainable earnings and the value of such assets is separately added to the value of the business in order to derive the total value of the company.

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158 An asset based methodology is applicable in circumstances where neither a capitalisation of earnings nor a DCF methodology is appropriate. It can also be applied where a business is no longer a going concern or where an orderly realisation of assets and distribution of the proceeds is proposed. Using this methodology, the value of the net assets of the company are adjusted for the time, cost and taxation consequences of realising the company’s assets.

Methodologies selected 159 The market value of the equity in QMS is based upon a sum-of-the-parts approach pursuant to

which the market value of its individual business divisions (QMS Australia, QMS Sport, MediaWorks and Corporate) is aggregated with the realisable value of its other assets / (liabilities) and net borrowings36.

160 The valuation of the individual business divisions has been made on the basis of market value as a going concern. The capitalisation of earnings (using EBITDA) method has been adopted as the primary valuation approach. Under this methodology the value of the business is represented by its underlying maintainable EBITDA capitalised at a rate (or EBITDA multiple) reflecting the risks inherent in those earnings.

161 We have adopted this method when valuing QMS’s individual business divisions for several reasons, including:

(a) QMS has both a demonstrated history of profitability and an expectation of ongoing profitability

(b) QMS’s business divisions operate in a mature industry and have well-established market positions

(c) we do not have long-term cash flow projections which we regard as sufficiently robust to enable a DCF valuation to be undertaken

(d) the EBITDA multiples for listed companies exposed to similar industry sectors as the business divisions of QMS can be derived from publicly available information

(e) transaction evidence in the respective industry sectors is generally expressed in terms of EBITDA multiples.

162 We have also compared our assessed value of the equity in QMS (on a per share basis) with the listed market prices of QMS shares on the ASX prior to press speculation regarding potential takeover interest in QMS and the considered reasonableness of the implied premium.

36 A sum-of-the-parts approach is necessary to recognise the characteristics, growth prospects and risks of QMS’s

individual business divisions.

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VI Valuation of 100% of QMS

Overview 163 As stated in Section V, our assessment of the market value of the equity in QMS is based

upon a sum-of-the-parts approach pursuant to which the market value of its individual business divisions (QMS Australia, QMS Sport, MediaWorks and Corporate) is aggregated with the realisable value of its other assets / (liabilities) and net borrowings37.

164 The valuation of the individual business divisions has been made on the basis of market value as a going concern. The capitalisation of earnings (using EBITDA) method has been adopted as the primary valuation approach. Under this methodology the value of the business is represented by its underlying maintainable EBITDA capitalised at a rate (or EBITDA multiple) reflecting the risks inherent in those earnings.

165 We have compared our assessed value of the equity in QMS (on a per share basis) with the listed market prices of QMS shares on the ASX prior to press speculation regarding potential takeover interest in QMS and the considered reasonableness of the implied premium.

Valuation of QMS Australia 166 QMS Australia is QMS’s largest operating division. The division primarily operates across

an established out-of-home advertising portfolio comprising digital and static billboards, street furniture and airport media throughout Australia. QMS Australia also operates a specialised print production business as well as out-of-home advertising services in Indonesia.

Assessment of underlying EBITDA 167 In order to assess the appropriate level of EBITDA for valuation purposes we have had regard

to the historic and forecast results of the business, and discussed the business’ financial performance, operating environment and prospects with QMS management.

168 A summary of QMS Australia’s revenue and underlying EBITDA for the four half years to 30 June 2019 and 12 months to 31 December 2018 and 30 June 2019 is set out below:

QMS Australia– revenue and underlying EBITDA(1)(2)(3) Six months to Twelve months to

31 Dec 17

$m 30 Jun 18

$m 31 Dec 18

$m 30 Jun 19

$m 31 Dec 18

$m 30 Jun 19

$m Underlying revenue 55.3 58.5 62.0 61.3 120.5 123.3 Underlying EBITDA 19.3 18.6 20.3 21.6 39.0 42.0 Underlying EBITDA margins 35.0% 31.9% 32.8% 35.3% 32.4% 34.0% Number of sites at period end Digital – large format(4) 72 86 104 116 104 116 Static – large format(4) 264 261 260 255 260 255 Total 336 347 364 371 364 371

37 A sum-of-the-parts approach is necessary to recognise the characteristics, growth prospects and risks of QMS’s

individual business divisions.

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Note: 1 Rounding differences exist. 2 Prior to significant items and impacts from AASB 16 – Leases. The application of AASB 16 is

expected to significantly increase QMS’s reported EBITDA because rent expenses will be replaced by (right to occupy) amortisation charges and interest expenses. However, for valuation purposes this EBITDA uplift from AASB 16 should be ignored as it is simply an accounting entry which has no cash flow impact, or impact on the underlying profitability of QMS.

3 Underlying EBITDA includes 100% of the EBITDA generated by The Digital Outdoor Group Pty Limited (in which QMS has a 50% interest) and BMG Australasia Pty Ltd (95% interest). However, the share of EBITDA attributed to the minority shareholders in these businesses was only $0.1 million in the 12 months to 30 June 2019.

4 Includes owned and represented (i.e. member) sites. Source: QMS.

169 As shown above, QMS Australia has significantly grown both the total number of billboards

and the number of digital billboards since 31 December 2017. In the six months to 30 June 2019 approximately 81% of Australian media revenue was generated from digital billboards.

170 For valuation purposes we have adopted underlying EBITDA of $49.0 million. This is consistent with the level of underlying EBITDA achieved in the 12 months to 30 June 2019 of $42 million, which we have adjusted to reflect:

(a) the full year EBITDA contribution from the additional billboards which commenced during the 12 months ended 30 June 2019, and the significant revenue uplift from the conversion of static to digital billboards38

(b) the full year EBITDA contribution from the additional nine digital billboards expected to be added between 30 June 2019 and 31 December 2019

(c) the full year EBITDA contribution from the Essendon Airport contract which commenced on 1 November 201939

(d) synergy benefits of $1.0 million expected to be realised in respect of QMS Sport’s acquisition of TLA Australia40.

38 QMS has found that on average a digital panel can increase revenue by an average of four to five times as

digitisation allows for multiple advertisers, time of day advertising and greater interactivity and engagement. 39 For commercial reasons we are unable to disclose the expected full year revenue and EBITDA contribution from

this contract. 40 Whilst total group synergies have been estimated by management at approximately $2.0 million per annum, for

valuation purposes they have been shared equally between QMS Australia and QMS Sport.

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Assessment of EBITDA multiple 171 The selection of the appropriate EBITDA multiple to apply is a matter of judgement but

normally involves consideration of a number of factors including, but not limited to:

• The stability and quality of earnings • The quality of the management and the likely

continuity of management • The nature and size of the business • The spread and financial standing of customers • The financial structure of the company and

gearing level • The multiples attributed by share market

investors to listed companies involved in similar activities or exposed to the same broad industry sectors

• The multiples that have been paid in recent acquisitions of businesses involved in similar activities or exposed to the same broad industry sectors

• The future prospects of the business including the growth potential of the industry in which it is engaged, strength of competitors, barriers to entry, etc

• The cyclical nature of the industry • Expected changes in interest rates • The asset backing of the underlying business of

the company and the quality of the assets • The extent to which a premium for control is

appropriate • Whether the assessment is consistent with

historical and prospective earnings

172 We discuss below specific factors taken into consideration when assessing the appropriate

EBITDA multiple range for QMS Australia.

Listed company multiples 173 The following table summarises the key trading metrics of ASX and international securities

exchange listed companies that provide out-of-home advertising products and services:

Listed out-of-home company multiples(1) EV / EBITDA(5)(6)

Company Year end EV(3)(4) A$m

CY19 x

CY20 x

Australian companies oOh!media(7) 31 Dec 1,087 8.4 7.3 QMS 31 Dec 473 7.3 6.1 International companies Lamar Advertising 31 Dec 16,479 14.4 13.9 JCDecaux 31 Dec 10,721 8.3 7.9 Ströer SE 31 Dec 9,411 10.5 9.7 Clear Channel Outdoor 31 Dec 8,966 10.4 9.8 Outfront Media 31 Dec 8,704 11.5 10.9 APG SGA 31 Dec 1,256 13.5 13.9 F

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Note: 1 Enterprise value (EV) and earnings multiples as at 6 November 2019, based upon latest available

information. QMS EV as at 23 October 2019 (being the last trading day prior to press speculation regarding potential takeover interest in QMS).

2 A brief description of each company’s operations is set out at Appendix C. 3 EV includes net debt (interest bearing liabilities less non-restricted cash), net derivative liabilities, net

pension liabilities, market capitalisation adjusted for material option dilution and excludes surplus assets (as well as operating lease liabilities recognised under AASB / International Financial Reporting Standard (IFRS) 16).

4 Foreign currencies have been converted to Australian dollars (AUD) at the exchange rate prevailing as at 6 November 2019.

5 Unless otherwise noted, the multiples are based on Bloomberg broker average forecasts (excluding outliers and outdated forecasts).

6 oOh!media multiples are based on average analyst estimates from Canaccord, Credit Suisse and Morningstar (26 August 2019) and JP Morgan, Macquarie and Morgans Financial (27 August 2019). QMS multiples are based on average estimates from Canaccord (25 August 2019), CCZ Equities (4 September 2019) and EL&C Baillieu (9 September 2019).

7 We note that on 3 December 2019 (i.e. subsequent to our analysis on 6 November 2019), oOh!media increased its EBITDA guidance for CY19. oOh!media’s CY19 and CY20 EBITDA multiples have increased accordingly and as at the date of this report approximate 9.5 times and 8.5 times respectively.

Source: Bloomberg, company announcements and LEA analysis.

174 The above multiples are based on the listed market price of each company’s shares (and

therefore exclude a premium for control). Empirical evidence from research undertaken by LEA indicates that the average premium paid above the listed market price in successful takeovers in Australia ranges between 30% and 35% (assuming the pre-bid market price does not reflect any speculation of the takeover)41. This broadly translates to a premium of 20% to 25% at the EBITDA multiple or EV level, although this varies depending on the level of debt funding employed in each company.

175 In addition, we note that:

(a) QMS trades on lower multiples than oOh!media. This is likely to reflect, inter alia: (i) the greater market capitalisation of oOh!media and larger size of its advertising

portfolio and reach (ii) the proportion of QMS’s business which is represented by QMS Sport, which has

been acquired on lower multiples than those traditionally paid for out-of-home advertising businesses.

This is partly offset by the fact that in recent periods QMS Australia’s outdoor advertising revenue growth (some 6% for 1HY19 compared to the prior corresponding

41 LEA has analysed the control premiums paid in successful takeovers and other change in control transactions

involving cash consideration in Australia over the period 2000 to 2018. LEA’s study covered around 500 transactions in all sectors excluding real estate investment trusts, based on data sourced from Bloomberg, Connect4 and public company transaction documents and ASX announcements. Scrip transactions were excluded from the analysis because the value of the scrip consideration can vary materially depending on the date of measurement.

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period) has exceeded industry averages (some 5% over the same period), principally due to the relatively high proportion of revenue generated from digital billboards42

(b) the EBITDA multiples shown above are based on closing share prices at a point in time and are not necessarily representative of the range of multiples that the companies trade on over time (which are shown further below)

(c) whilst the operations of the international listed companies are broadly comparable to QMS Australia, it should be noted that they are significantly larger than QMS Australia and operate in different geographic regions, and are therefore subject to different economic / industry cycles.

ASX listed out-of-home company multiples over time 176 We set out below the one year forward EBITDA multiples for the ASX listed out-of-home

advertising companies (and APN Outdoor Group Limited (APN Outdoor) prior to its acquisition by JCDecaux) from 1 July 2017 to 6 November 201943:

One year forward EBITDA multiples 1 July 2017 to 6 November 2019(1)(2)

Note: 1 The multiples for QMS are only depicted up to 23 October 2019, being the last trading day prior to press speculation regarding

potential takeover interest in the Company. 2 We note that on 3 December 2019 (i.e. subsequent to our analysis on 6 November 2019), oOh!media increased its EBITDA guidance

for CY19. oOh!media’s one year forward multiple has increased accordingly and at the date of this report approximates 8.5 times. Source: Bloomberg and LEA analysis.

42 Industry wide revenue from digital sources continues to grow while non-digital continues to decline. QMS

Australia generated some 81% of its Australian out-of-home advertising revenue from digital sources in comparison to the industry average of 56% (based on 1HY19).

43 The multiples for QMS are only depicted up to 23 October 2019, being the last trading day prior to press speculation regarding potential takeover interest in the Company.

5.0x

7.0x

9.0x

11.0x

13.0x

Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Oct 18 Jan 19 Apr 19 Jul 19 Oct 19

APN Outdoor

oOh!media

QMS oOh!media makes offer for Adshel and subsequently

announced as preferred bidder

Press speculation regarding JCDecaux's takeover interest in APN Outdoor

10% decline in S&P/ASX Index

oOh!media issues revised (lower) CY19 EBITDA guidanceQMS FY18 results

QMS announces MediaWorks merger and strategic review of QMS Sports

Press speculation regarding takeover interest in QMS

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177 As evidenced from the above:

(a) since late October 2018, the EBITDA multiples for the ASX listed out-of-home advertising companies have declined significantly. Initially this reflected declines in world equity markets (which fell sharply in the fourth quarter of CY1844). Whilst world equity markets have subsequently recovered, out-of-home advertisers continue to trade at lower levels, due in part to the slowing rates of growth experienced by the advertising market in general45, as well as the out-of-home advertising sector during CY1946

(b) since the beginning of 2019, QMS has generally traded within a range of between 6.25 times and 7.0 times one year forward EBITDA estimates (this compares to some 8.0 times to 9.0 times prior to its announcement of its FY18 results47)

(c) both APN Outdoor and oOh!media have generally traded on higher EBITDA multiples than QMS as both companies have a significantly larger advertising portfolio.

Transaction evidence 178 There have been a number of transactions involving the listing and acquisition of companies

that provide out-of-home advertising products and services in recent years.

IPO evidence 179 A summary of the multiples implied by recent initial public offerings (IPOs) is shown below:

Transaction evidence – IPOs

Date(1) Company

Mkt cap at Offer Price

$m

Pro-forma debt $m

EV at Offer Price

$m

EBITDA multiple

x 29 Jun 15 QMS 163.5 (12.1) 151.4 nm 17 Dec 14 oOh!media(2) 289.3 76.3 365.5 7.5 (F) 11 Nov 14 APN Outdoor(2) 424.9 78.8 503.6 9.4 (F) Note: 1 Date of listing. 2 Multiples based on pro-forma forecast earnings for the 12 months ended 31 December 2015. H – Historic. F – Forecast. nm – not meaningful. Source: Company prospectuses and LEA analysis.

180 In respect of the above, we note that:

(a) the above IPOs occurred a number years ago in different advertising market conditions to those currently prevailing

(b) the multiples implied by the above mentioned IPOs do not reflect a control premium

44 For example, the S&P/ASX 200 Index fell by some 10.4% from 9 October 2018 through to its intra-day low on

24 December 2018. 45 Which has led to multiple major media company earnings downgrades (refer paragraphs 116). 46 YOY revenue growth in the out-of-home sector slowed from 10.2% and 9.8% for 3Q18 and 4Q18 respectively, to

5.4%, 5.0% and negative 0.9% in three quarters to 30 September 2019 respectively (refer to paragraph 123). 47 Similarly, oOh!media has more recently traded within a general range of 7.0 times to 8.5 times, which compares to

its pre October 2018 trading range of some 8.5 times to 10.0 times.

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(c) QMS listed in order to raise capital to complete the acquisition of a number of outdoor advertising assets. The pro-forma EBITDA set out in its prospectus was based upon an estimate by the Company of the aggregated pro-forma earnings of the majority (but not all) of the businesses that were to be acquired and, in our opinion, was not indicative of the future earnings prospects of the Company48.

Transaction evidence 181 In addition to the above IPO transaction evidence, we have also reviewed the market for

publicly available information relating to relatively recent transactions concerning companies that provide out-of-home advertising products and services in Australia and NZ.

182 A summary of the transactions that we identified and for which multiples can be derived based upon publicly available information are set out in the following table:

Transaction evidence – out-of-home advertisers(1)

Date(2) Target Acquirer EV(3) A$m

EV / EBITDA x

26 Jun 18 APN Outdoor JCDecaux SA 1,224.9 13.2(4) 25 Jun 18 Adshel (100%) oOh!media 570.0 11.6 (F)(5) 25 Oct 16 Adshel (50%) HT&E(6) 532.8 12.7 (H)(7) 11 Oct 16 Executive Channel International oOh!media 68.9 14.4 (F)(8) 1 Dec 15 iSite Limited QMS 44.4 7.9 (F)(9) 22 Oct 13 APN Outdoor (48%) Quadrant 239.5 7.5 (F)(10) 31 Oct 12 Eye Corp Pty Limited oOh!media 113.0(11) 9.7 (H)(12) 23 Feb 12 APN Outdoor JV with Quadrant 272.0 7.7 (H)(13) 13 Dec 11 oOh!media CHAMP 195.6 7.6(4) Note: 1 A brief description of each transaction is set out at Appendix D. 2 Date of announcement. 3 Implied value of consideration for 100% if transaction does not already involve a 100% acquisition. 4 Based on mid-point of maintainable earnings as assessed by the independent expert. 5 Based upon the mid-point of pro-forma EBITDA to 31 December 2018 (excluding synergies). Pro-

forma adjustments include the full year run rate of certain new contracts secured and associated digitisation, plus the impact of renewals.

6 Which at the time was known as APN News & Media Limited. 7 Based upon historic EBITDA for 12 months ending 30 June 2016. 8 Based upon forecast EBITDA for 12 months ending 31 December 2017 (excluding synergies). 9 Based upon the mid-point of forecast EBITDA for 12 months ending 31 March 2016. 10 Based upon forecast EBITDA for 12 months ending 31 December 2013. 11 Includes deferred consideration of $15 million (payable three years post completion). 12 Multiple based on historic results to 31 August 2012. 13 Based upon historic EBITDA for 12 months ending 31 December 2011. H – Historic. F – Forecast. Source: Company announcements, press commentary and LEA analysis.

48 For example, on 28 August 2015, QMS provided 1HY16 EBITDA guidance of $9.5 million. This guidance

significantly exceeded not only the pro-forma estimate for the prior corresponding period (i.e. 1HY15) of $1.7 million but also the full year pro-forma estimate for FY15 of $3.1 million.

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183 In relation to the transaction evidence it should be noted that:

(a) except where noted, the transactions relate to the acquisition of 100% of the businesses and therefore implicitly incorporate a premium for control

(b) the transaction multiples have generally increased over the period to June 2018. However, since October 2018, the forward EBITDA multiples of the ASX listed companies in the out-of-home advertising sector have declined significantly (approximately 20% to 25%) for the reasons stated above

(c) some of the EBITDA multiples implied by recent transaction evidence reflected an expectation that significant synergies would be generated. In particular, we note that oOh!media’s acquisition of Adshel was expected to realise cost savings of $15 million to $18 million per annum (before tax). These expected synergies were high relative to Adshel’s standalone (pro-forma) EBITDA for CY18 of $48 million to $50 million per annum49. The inclusion of synergies in the calculation of the transaction evidence for Adshel reduces the mid-point EV / (pro-forma) CY18 EBITDA multiple from 11.6 times (pre-synergies) to 8.7 times (post-synergies)

(d) the transaction multiples (except for the APN Outdoor transaction announced in June 2018 and the oOh!media transaction announced in December 2011) are calculated based on the most recent actual earnings (historic multiples) or expected future earnings for the current year at the date of the transaction (forecast multiples). The multiples (except for the APN Outdoor transaction announced in June 2018 and the oOh!media transaction announced in December 2011) are therefore not necessarily reflective of the multiple which would be derived from an assessment of each target company’s “maintainable” earnings

(e) we consider the oOh!media (December 2011), APN Outdoor (February 2012), Eye Corp Pty Limited (October 2012) and APN Outdoor (October 2013) transaction evidence to have been superseded by the IPO evidence, subsequent market trading, and the most recent acquisition of APN Outdoor

(f) the remaining transactions concern businesses that differ materially in terms of their size and nature of operations when compared to the aggregate operations of QMS Australia.

Potential synergies 184 Quadrant has not provided any specific guidance on the level of synergies it expects to realise

from the acquisition of QMS. However, if the Scheme is approved and implemented, QMS will be delisted from the ASX, resulting in the elimination of listed public company costs (e.g. director fees, listing fees, share registry fees, shareholder communication costs etc). Depending upon the identity of the acquirer, it is conceivable that other synergies (e.g. back office costs savings) could also be generated.

185 However, we note that the existence of public company cost savings as well as other cost (and revenue) synergies that arise from acquisitions / privatisations are one of the key reasons why bidders pay a premium to acquire a company.

49 Pro-forma EBITDA as disclosed by oOh!media and includes the full-year run rate of certain new contracts secured

and associated digitisation plus the impact of renewals.

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186 Accordingly, in our opinion, it is inappropriate (in the circumstances of QMS Australia) to incorporate a separate value for synergies over and above that implicitly reflected in the controlling interest multiple applied.

Conclusion on appropriate EBITDA multiple 187 Having regard to the above, in our opinion, an EBITDA multiple range of 9.0 times to

10.0 times is appropriate when applied to the EBITDA that has been adopted for valuation purposes. Whilst this represents a significant discount to the EBITDA multiples implied by APN Outdoor and Adshel transactions in late 2018, in our opinion, this is appropriate due to:

(a) the decline in EBITDA multiples for the ASX listed companies in the out-of-home advertising sector since the date of these acquisitions

(b) the smaller size of QMS Australia compared to APN Outdoor.

Assessed value of QMS Australia 188 Given the above, we have assessed the value of QMS Australia as follows:

QMS Australia – value of business

Paragraph Low $m

High $m

EBITDA for valuation purposes 170 49.0 49.0 EBITDA multiple (times) 187 9.0 10.0 Enterprise value 441.0 490.0

Valuation of QMS Sport 189 As noted in Section III, the major businesses of QMS Sport comprise:

(a) QMS Sport Australia50 – which is a leading provider of in-bowl digital stadium and other advertising at key sporting stadia across Australia51. QMS acquired a 80% interest in December 2016, and increased its ownership to 100% in December 2018

(b) TGI / TGIE – which provides high end LED signage and software management platforms to help clubs, agencies and rights holders optimise their brand exposure and enrich the consumer experience at major events. QMS acquired a 90% interest in TGI with effect from 1 March 2019

(c) TLA Australia / Stride – which is a leading talent management and sports marketing agency in Australia and the UK. QMS acquired 100% of TLA Australia on 6 September 2019 and Stride on 10 September 2019

(d) Sportsmate – a developer of sporting applications that connect fans with their favourite sporting clubs across a range of sporting codes.

50 Formerly OAMM. 51 The NZ operations are now part of the merged QMS NZ / MediaWorks entity.

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190 In addition:

(a) QMS acquired a 50% equity stake in LIVE Docklands in December 201652, which held the rights to several digital advertising assets within Melbourne’s Marvel Stadium (previously known as Etihad Stadium). However, these advertising rights expired in CY18 and the LIVE Docklands entity is now effectively dormant

(b) QMS holds a 51% interest in Gomeeki Operations Pty Ltd (Gomeeki) (a mobile application that provides a sports fan loyalty platform for sports clubs) and a 51% interest in Rpple Media Pty Ltd (Rpple) (a social media brand ambassador platform). Both businesses are incurring small losses and are not expected to continue in CY20.

Assessment of underlying EBITDA 191 In order to assess the appropriate level of EBITDA for valuation purposes we have had regard

to the historic and forecast results of the business, and discussed the business’ financial performance, operating environment and prospects with QMS management.

192 It is not possible to compare the historic reported period on period financial performance of QMS Sport due to the various business acquisitions that have occurred in recent history (see above). Given this, we set out below the historic results on a pro-forma basis which assumes 100% ownership of the various business (excluding LIVE Docklands, Gomeeki and Rpple) from 1 January 2018:

QMS Sport – pro-forma revenue and EBITDA (assuming 100% ownership for all periods)(1)(2)(3) Six months to Twelve months to

30 Jun 18

$m 31 Dec 18

$m 30 Jun 19

$m 31 Dec 18

$m 30 Jun 19

$m Revenue 45.6 56.6 59.7 102.2 116.3 Underlying EBITDA 4.4 5.9 12.9 10.3 18.8 Note: 1 Rounding differences exist. 2 Pro-forma results include 100% of QMS Sport Australia, TGI, TLA Australia and Sportsmate from

1 January 2018 but excludes revenue and EBITDA contribution from LIVE Docklands, Gomeeki and Rpple as these are not expected to continue in CY20.

3 Prior to significant items and impacts from AASB 16 – Leases. Source: QMS.

193 In assessing the underlying EBITDA for valuation purposes, we note the following:

(a) the significant increase in underlying EBITDA in the six months to 30 June 2019 (and in turn, the 12 months to 30 June 2019) principally reflects the performance of the TGI business. TGI’s results for the period were boosted by revenue from the ICC Cricket World Cup and the Concacaf Gold Cup53. However, these events only occur every four years, and TGI / QMS Sport does not have contractual rights to these future events

52 QMS subsequently increased its ownership to 100%. 53 The Concacaf Gold Cup is an international men’s football championship of the North, Central American and

Caribbean region.

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(b) QMS management have provided us with a pro-forma forecast for CY19 which reflects the full year impact of recent acquisitions. Whilst we have been asked not to disclose the performance of all individual businesses, we note that: (i) QMS Sport is expected to achieve an improved result in CY19 due to the higher

level of media / advertising rights acquired during the period (ii) the CY19 EBITDA for TGI is expected to significantly exceed management’s

estimate at the time of the acquisition announcement in August 2018 (of $7.0 million to $8.0 million54). However, as noted above, the CY19 results are boosted by revenue from the ICC Cricket World Cup and the Concacaf Gold Cup

(iii) the CY19 EBITDA for TLA Australia is consistent with management’s estimate at the time of the acquisition announcement in August 2018 (of around $6.2 million)

(c) following the announcement of the TLA Australia / Stride acquisitions, QMS provided an investor presentation in August 2019 on the QMS Sport business. This presentation included underlying EBITDA guidance for CY20 of $24.0 million which reflected: (i) the full year expected EBITDA contribution TGI and TLA Australia / Stride

businesses (ii) an allowance for the share of EBITDA attributable to minority shareholders in

TGI (iii) synergy benefits of $2.0 million per annum (iv) an allocation of corporate costs (which are not allowed for in the table at

paragraph 192).

194 Having regard to the above, we have adopted EBITDA for valuation purposes of $18.0 million. This is consistent with the underlying EBITDA expected to be achieved in CY19, adjusted for:

(a) the lower EBITDA expected in CY20 for TGI (b) the 10% share of EBITDA attributable to the minority shareholders in TGI (c) the elimination of losses by Sportsmate (d) synergy benefits of $1.0 million55.

195 This is lower than the level of EBITDA forecast by management in its August 2019 investor

presentation, primarily due to the weaker advertising market conditions currently prevailing and underperformance by the Sportsmate business.

54 Management’s EBITDA estimate was for FY19 rather than CY19. 55 Whilst total group synergies have been estimated by management at approximately $2.0 million per annum, for

valuation purposes they have been shared equally between QMS Australia and QMS Sport.

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Assessment of EBITDA multiple 196 As each of the core business operations of QMS Sport have only been recently acquired, we

have had primary regard to the EBITDA multiples implied by these acquisitions (which are shown below):

QMS Sport - transaction evidence

Date(1) Businesses acquired

Cost of acquisition(2)

$m

Expected EBITDA

contribution(3) $m

EV / EBITDA x

Aug 19 100% of TLA Australia and Stride(4) 32.7 6.2(5) 5.3 Dec 18 20% of QMS Sport Australia(6) 2.0 0.5(7) 4.0 Aug 18 90% of TGI(8) 36.9 6.75(9) 5.5 Dec 16 80% of QMS Sport Australia(6) 11.3(10) 3.0(11) 3.8 Note: 1 Date of announcement. 2 Excluding transaction costs. 3 As at date of acquisition announcement. EBITDA reflects attributable share of EBITDA only (i.e.

excludes minority interest share of EBITDA). 4 Completion of the TLA Australia and Stride acquisitions occurred on 6 September 2019 and

10 September 2019. 5 Management estimate for CY19 as at date of acquisition announcement. Excludes synergy estimates

of between $1.0 million and $2.0 million per annum. 6 Formerly OAMM. 7 Based on CY18 EBITDA of $2.6 million (100%), multiplied by 20% interest acquired. 8 Completion of the TGI acquisition did not occur until 1 March 2019. 9 Being mid-point of forecast EBITDA for FY19 of $7.0 million to $8.0 million, multiplied by 90%

interest acquired. 10 Whilst 50% of LIVE Docklands ($1.3 million) and 20% of Sportsmate ($1.1 million) were acquired

at the same time, the EBITDA multiple for these businesses has not been shown as LIVE Docklands is no longer operating and Sportsmate was loss making at the date of this transaction.

11 Forecast at the date of announcement for FY18 (being the first full year following completion of integration). Figure represents 80% share of QMS Sport Australia EBITDA only.

Source: Company announcements, press commentary and LEA analysis.

197 The above EBITDA multiples are based on the prices paid for each individual business.

However, in our view, the combined QMS Sport group is likely to trade on higher implied EBITDA multiples than the individual businesses. This is principally because of the greater scale of the group, and is consistent with empirical evidence undertaken by LEA56.

198 Having regard to the above, in our opinion, an EBITDA multiple range of 6.0 times to 6.5 times is appropriate when applied to the EBITDA that has been adopted for valuation purposes.

56 As one of Australia’s leading valuation firms, LEA has an extensive database of Australian company transactions,

including details of prices paid, implied enterprise values and earnings multiples. This evidence indicates that: (a) small companies generally trade on significantly lower earnings multiples than larger companies (provided

other variables such as expected earnings growth are similar); and (b) investors usually require a higher rate of return to compensate for the additional risks associated with small

companies compared to larger ones.

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Assessed value of QMS Sport 199 Based on the above, we have assessed the value of QMS Sport as follows:

QMS Sport – assessed value(1)

Paragraph Low $m

High $m

EBITDA for valuation purposes 194 18.0 18.0 EBITDA multiple (times) 198 6.0 6.5 Assessed value of QMS Sport 108.0 117.0 Note: 1 Rounding differences may exist.

Valuation of investment in MediaWorks 200 As noted in Section III, on 10 December 2018, QMS announced a proposed merger of its NZ

out-of-home, digital media and production business (QMS NZ) with MediaWorks, NZ’s leading independent radio, TV and digital business, subject to various conditions precedent. Consent from the NZ OIO to undertake the merger was received on 29 July 2019, and the merger was completed on 3 September 2019.

201 The merged entity is referred to as MediaWorks and QMS holds a 40% equity interest.

202 As noted below, nearly all of the earnings of MediaWorks (pre-merger) are generated by its radio broadcasting business, and QMS NZ is principally an out-of-home advertising business. Accordingly, separate values have been placed on both businesses. In addition, a separate value has also been placed on the TV broadcasting business and related property assets. The TV broadcasting business is currently loss making, but owns its head office and studios in Auckland, NZ.

Assessment of underlying EBITDA 203 As the merger of QMS NZ and MediaWorks was only recently completed, we set out below the

individual historic revenue and underlying EBITDA contributions from each merger party:

MediaWorks – pro-forma revenue and underlying EBITDA(1)(2) CY17 CY18 6 mths to Actual Actual 30 Jun 19 NZ$m NZ$m NZ$m Revenue MediaWorks (pre-merger)(3) 285.1 289.6 136.3 QMS NZ 65.9 62.4 29.4 Pro-forma revenue 351.0 352.0 165.7 Underlying EBITDA MediaWorks (pre-merger) 21.5 24.7 4.7 QMS NZ 14.0 11.6 5.3 Pro-forma underlying EBITDA 35.5 36.3 10.0 Underlying EBITDA margins MediaWorks (pre-merger) 7.5% 8.5% 3.4% QMS NZ 21.2% 18.6% 18.0% Pro-forma EBITDA margins 10.1% 10.3% 6.0%

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Note: 1 Rounding differences may exist. 2 Prior to significant items. 3 The revenue figures shown above for MediaWorks (pre-merger) are lower than their reported

statutory figures as certain cost of sale items have been netted off against revenue. Source: QMS.

204 In assessing the underlying EBITDA for valuation purposes, we note the following:

(a) MediaWorks (pre-merger) – we have been requested not to disclose the financial performance of the individual business units of MediaWorks. However, it should be noted that: (i) the radio business generates more than 95% of the earnings of the group (prior to

unallocated corporate costs) (ii) the TV broadcasting business has been unprofitable at the EBITDA line (prior to

unallocated corporate costs) in each period (iii) on 18 October 2019, QMS announced that MediaWorks had announced an

intention to sell the TV broadcasting business as well as the real estate associated with the TV business, including its head office and studios. We understand from management that the sale process has not started, and accordingly no binding offers for the TV broadcasting business have been received to date

(iv) the business is seasonal with the large majority of EBITDA generated in the second half of the calendar year

(v) underlying EBITDA in the nine months to 30 September 201957 was below the prior corresponding period (i.e. the nine months to 30 September 2018) principally due to the performance of the TV broadcasting business (which continues to generate losses at the EBITDA level). In contrast, the underlying EBITDA of the radio and other businesses of MediaWorks (pre-merger) are ahead of the results in the prior corresponding period

(b) QMS NZ – the results of QMS NZ primarily reflect the NZ out-of-home advertising business formerly owned by QMS, which comprises an established portfolio of 5458 premium landmark digital billboards, 44758 static billboards, street furniture, transit and airport media. In respect of QMS NZ we note that: (i) EBITDA has declined since CY17, but is expected to increase in CY19 (noting

that underlying EBITDA of QMS NZ in the nine months to 30 September 2019 is ahead of the results for the prior corresponding period)

(ii) the EBITDA of QMS NZ also includes 100% of the EBITDA attributable to Omnigraphics Limited (which is 75% owned) and Digital Commons (which is 60% owned). Our valuation excludes the share of EBITDA attributable to the minority shareholders in these two businesses (which is estimated at $0.45 million for CY19)

57 Based on unaudited management accounts. 58 As at 30 June 2019.

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(iii) on 3 September 2019, QMS announced that it had entered into an unconditional agreement to acquire ETC’s premium Christchurch digital billboard portfolio59. This increased the number of large format digital billboards in the portfolio from 54 to 66. Given the acquisition date, the above results do not reflect any earnings contribution from ETC

(c) Synergy benefits – QMS management have advised that the merged entity expects to generate some synergies from the combination of the MediaWorks and QMS NZ businesses. However: (i) most of these synergies are of a revenue nature (and accordingly, in our view, it is

not appropriate to reflect these synergies in the level of earnings adopted for valuation purposes at this stage)

(ii) these synergies may not be able to be generated to the same extent if the TV business is sold.

205 Having regard to the above, we have adopted EBITDA for valuation purposes of $44.0 million60. This is higher than the level of underlying EBITDA achieved in CY18 because:

(a) the underlying EBITDA generated by the radio business of MediaWorks (pre-merger) and QMS NZ in the nine months to 30 September 2019 is above the level of underlying EBITDA generated in the prior corresponding period

(b) we have added back the EBITDA losses on the TV business (prior to any corporate cost allocation) on the basis that it is inappropriate to capitalise these losses in perpetuity61 62

(c) we have included the expected full year EBITDA contribution from ETC (which was only acquired in September 2019).

Assessment of EBITDA multiple 206 As stated above, the EBITDA adopted for valuation purposes principally reflects the results of

MediaWorks’ radio business and QMS NZ’s out-of-home advertising business. Accordingly, we set out below our opinion on the appropriate EBITDA multiples for these two businesses.

EBITDA multiple for radio business 207 Whilst there are a number of publicly listed companies which have significant radio interests

(e.g. Southern Cross Media Group Limited, NZME and Pacific Star Network Limited), these companies also have other businesses (e.g. newspaper publishing). As a result, in our opinion, these listed company multiples (which are set out in Appendix C) are less reliable than the recent transaction evidence in the radio sector, which is summarised below:

59 The acquisition of ETC completed in September 2019. 60 The EBITDA adopted for valuation purposes excludes the share of EBITDA attributable to the minority

shareholders in Omnigraphics Limited (25% minority interest) and Digital Commons (40% minority interest). 61 We have separately assessed the value of the TV business below. 62 Whilst it is possible that corporate costs may be able to be reduced if the TV business is sold, the sale of the TV

business may also result in the loss of some revenue in the radio business due to cross promotion activities.

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Radio transactions – implied EBITDA multiples(1)

Date(1) Target Acquirer Consideration(2)

A$m

Historic EBITDA multiple

x Oct 19 Redwave(4) Southern Cross Media 28.0 8.0 Aug 19 Macquarie Media Nine Entertainment 274.2 10.5 Dec 14 Radio 96FM Perth APN News & Media 78.0 9.8 Feb 14 50% of Australian Radio Network APN News & Media 493.0 6.9 Note: 1 A brief description of each transaction is set out at Appendix D. 2 Date of announcement. 3 Implied value of consideration for 100% if transaction does not already involve a 100% acquisition. 4 Seven West Media’s Western Australian radio assets. Source: Company announcements, press commentary and LEA analysis. n/a – not applicable.

208 Whilst Macquarie Media and the radio business of MediaWorks are of a similar size, we note

that MediaWorks’ radio portfolio consists primarily of music radio stations as shown below:

MediaWorks radio formats – ranked by revenue contribution Brand Description Audience focus

Hot AC / pop music Female 30-59 years

Mainstream rock music Male 18-44 years

Hit / pop music Male / female 18-39 years

Easy listening music Female 35-59 years

Classic rock Male 35-59 years

Hip hop and RnB music Male / female 15-34 years

Dance and club music Male / female 20-39 years

Classic hits Male / female 50+ years

Streaming app for all radio brands

Source: MediaWorks.

209 In contrast, Macquarie Media is principally a news-talk and sports radio network, which is

considered to be a more resilient format to competition from other radio stations and alternative music distribution platforms (e.g. Spotify). In our view, this is likely to be a key reason for the higher EBITDA multiple implied by the Macquarie Media transaction.

210 Notwithstanding the above, we note that the radio business of MediaWorks is NZ’s largest radio network, with some 2.4 million weekly listeners across its portfolio of nine radio formats.

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211 When assessing the appropriate EBITDA multiple for the radio business, we have also had regard to the EBITDA multiple applied by the merger parties when valuing the radio business for the purposes of agreeing the merger terms63.

212 Having regard to the above we have applied an EBITDA multiple of 7.75 time to 8.25 times when valuing the MediaWorks business (pre-merger, and excluding the TV business).

EBITDA multiple for QMS NZ 213 As the QMS NZ business is similar to QMS Australia, when assessing the appropriate

EBITDA multiple for QMS NZ we have considered the matters set out in paragraphs 171 to 186 (including relevant listed company multiples and transaction evidence).

214 Having regard to these matters we have applied an EBITDA multiple of 7.75 times to 8.25 times when valuing the QMS NZ business. This is lower than the EBITDA multiple range applied when valuing QMS Australia of 9.0 times to 10.0 times, which we consider appropriate due to:

(a) the smaller size of QMS NZ compared to QMS Australia64 (b) the superior financial performance of QMS Australia over recent years.

215 Our assessed EBITDA multiple for the QMS NZ business is also consistent with the forecast

EBITDA multiple of 7.9 times implied by the acquisition of iSite in December 2015. iSite remains one of the key businesses in QMS NZ and was acquired by QMS for approximately A$44.4 million.

Value of core business 216 Given the above, we have assessed the value of MediaWorks’ core business as follows:

MediaWorks – assessed EV of core businesses(1)

Paragraph Low

NZ$m High

NZ$m EBITDA for valuation purposes(2) 205 44.0 44.0 EBITDA multiple (times)(3) 212 & 213 7.75 8.25 Assessed EV of core business 341.0 363.0 Note: 1 Rounding differences may exist. 2 Including the full year impact of ETC (which was acquired in September 2019). 3 LEA has independently assessed the appropriate EBITDA multiple for both the MediaWorks

business (excluding the TV business, which is loss making) and QMS NZ. For the reasons stated above, we consider the EBITDA multiple range for both business is similar.

63 As the EBITDA multiple applied by the merger parties was not publicly announced, we have been asked not to

disclose it in this report. 64 As one of Australia’s leading valuation firms, LEA has an extensive database of Australian company transactions,

including details of prices paid, implied enterprise values and earnings multiples. This evidence indicates that: (a) small companies generally trade on significantly lower earnings multiples than larger companies (provided

other variables such as expected earnings growth are similar); and (b) investors usually require a higher rate of return to compensate for the additional risks associated with small

companies compared to larger ones.

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TV assets and net debt 217 As noted above, MediaWorks has announced an intention to commence a sale process for the

TV business and related property assets. However, this process is at an early stage and no binding offers for the TV broadcasting business have been received to date.

218 As disclosure of our valuation range for the TV business and related property assets may prejudice the sale process, we have been asked not to set out our adopted valuation range. Accordingly, our assessed value of the TV business and related property assets has been netted off the net debt figure below.

219 However, our assessed value of the TV business and related property assets is not material in the context of the value of the MediaWorks business. In this regard, we note that:

(a) the TV broadcasting business continues to incur large losses at the EBITDA level (prior to any corporate cost allocation)

(b) these losses would increase if the property assets were sold (as the TV broadcasting business would then incur rental expenses associated with its TV studios and head office)

(c) ongoing losses and closure costs are likely to be substantial (and could exceed the net realisable value of the property assets)

(d) the ability of the TV broadcasting business to operate as a profitable standalone business is inherently uncertain

(e) the TV broadcasting business has a poor track record (as the parent entity of the business has been placed in receivership twice, in 1990 and 2013)

(f) given the above, there is a high probability that the TV broadcasting business will not be able to be sold.

Value of 40% interest in MediaWorks 220 On this basis our assessed value of QMS’s 40% interest in MediaWorks is as follows:

MediaWorks – assessed value of 40% equity interest(1) Paragraph Low High Enterprise value – core businesses NZ$m 216 341.0 363.0 Less net debt(2) (net of TV assets) NZ$m 217 to 219 (130.0) (130.0) Equity value NZ$m 211.0 233.0 Pro-rata value of 40% interest NZ$m 84.4 93.2 Less minority interest discount (10%) NZ$m 221 (8.4) (9.3) Market value of 40% interest NZ$m 76.0 83.9 Divided by NZD:AUD foreign exchange rate(3) 0.94 0.94 Market value of 40% interest A$m 71.4 78.8 Note: 1 Rounding differences may exist. 2 As at 30 September 2019. Net debt reflects the payment to QMS of the A$38 million capital return

in accordance with the terms of the merger, and is shown net of the value attributed to the TV assets. 3 Based upon the NZ dollar (NZD) / AUD exchange rate prevailing on 20 November 2019.

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221 As noted above, we have applied a 10% discount when valuing QMS’s 40% interest in MediaWorks. This recognises the fact that:

(a) QMS holds a minority shareholding and is entitled to appoint only two directors (out of five) to the MediaWorks Board

(b) QMS is in a stronger position than a small minority shareholder as it holds a significant minority shareholding, and can therefore veto any matters requiring a special resolution. Further, pursuant to the shareholders’ agreement between the parties, certain key business decisions require the prior approval of shareholders holding at least 75% of the votes cast.

Valuation of corporate costs 222 QMS’s unallocated corporate costs primarily relate to the costs associated with being a public

company (e.g. listing fees and share registry fees, shareholder communication costs etc), director fees, Chief Executive Officer and Chief Financial Officer (and certain other head office support staff) salaries, insurance and general consultancy fees. The unallocated corporate costs over the four half years to 30 June 2019 and 12 months to CY18 and FY19 are set out below:

QMS – unallocated corporate costs(1) Six months to Twelve months to

31 Dec 17

$m 30 Jun 18

$m 31 Dec 18

$m 30 Jun 19

$m 31 Dec 18

$m 30 Jun 19

$m Corporate costs (pre STI / LTI(2)) (3.5) (2.7) (3.2) (3.0) (5.9) (6.2) STI / LTI (0.5) (0.3) 0.1 (1.1) (0.2) (1.0) Corporate costs (post STI / LTI) (4.0) (3.0) (3.1) (4.1) (6.1) (7.3) Note: 1 Rounding differences may exist. 2 Short term incentives (STI). Long term incentives (LTI). Source: QMS.

223 We have discussed the level of corporate costs with management and have adopted

unallocated ongoing corporate costs of $7.0 million for valuation purposes. These costs have been capitalised the at an EBITDA multiple of 8.2 times to 9.1 times, which reflects the weighted average EBITDA multiples applied to the QMS Australia and QMS Sport businesses (as calculated below):

Unallocated corporate costs – weighted average multiple Paragraph Low High Assessed value: QMS Australia 188 441.0 490.0 QMS Sport 199 108.0 117.0 Subtotal (A) 549.0 607.0 EBITDA adopted for valuation purposes: QMS Australia 188 49.0 49.0 QMS Sport 199 18.0 18.0 Subtotal (B) 67.0 67.0 Weighted average multiple (A) / (B) 8.2 9.1

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224 Based on the above, we have valued unallocated corporate costs as follows:

QMS – value of unallocated corporate costs(1)

Paragraph Low $m

High $m

Unallocated corporate costs 223 (7.0) (7.0) EBITDA multiple 223 8.2 9.1 Value of unallocated corporate costs (57.4) (63.4) Note: 1 Rounding differences may exist.

Other assets / (liabilities) 225 QMS has a number of other assets / (liabilities) that are not reflected in our valuation of the

abovementioned business components and for which an allowance must be made. The assets and liabilities are as follows, and in aggregate amount to a net liability of $24.0 million:

(a) investments in non-controlled entities – QMS has a number of minority equity investments, which are not individually significant and to which we have attributed an aggregate value of $1.8 million

(b) deferred consideration – represents deferred consideration associated with site acquisitions, the acquisition of Stella Vista, the purchase of the remaining 20% of QMS Sport and TLA Australia. The future payments amount to approximately $13.1 million

(c) advisor fees – as at 30 September 2019, QMS had not paid advisor fees associated with the merger of QMS NZ and MediaWorks of approximately $2.5 million

(d) external loans – QMS has a number of loan assets and liabilities with external parties, which we have assessed as a net liability of $14.0 million as at 30 September 2019

(e) net loan receivables from outside equity interests – QMS has made a number of loans to subsidiaries which are not wholly owned. The proportion of the debt attributable to minority interests (which is an asset owing to QMS) is approximately $3.9 million

(f) contingent liabilities – we have not made any allowance for any damages that may be payable in respect of the legal proceedings against Manboom Group and Techfront Australia (refer paragraph 99(b)).

Net debt 226 As at 30 September 2019, QMS had net debt of $150.1 million (including derivative financial

instruments). However, we note that:

(a) QMS’s business is seasonal with the majority of profit being generated in the second half of the calendar year. As a result of this seasonality, QMS’s investment in working capital and its net debt varies during the year. Given this, for valuation purposes we are of the opinion that it is appropriate to consider the average net debt position throughout the year, rather than the net debt position at a point in time when determining the value of equity in QMS

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(b) as at 20 November 2019, QMS’s corporate bonds are presently trading at a small discount to face their value (plus accrued interest)

(c) QMS’s reported net debt position does not adjust for the third party minority interest in reported net debt. That said, the adjustment is relatively immaterial

(d) QMS shareholders will be entitled to receive the Final Dividend of up to 1.3 cents per QMS share for the financial year ending 31 December 2019. While the impact of the Final Dividend is not reflected in the above stated net debt balance, the cash cost thereof (approximately $4.5 million65) is expected to be covered by earnings generated prior to the implementation of the Scheme.

227 Having regard to the above, we have concluded that net debt of $148.0 million is appropriate for valuation purposes.

Share capital outstanding 228 QMS has some 344.738 million fully paid ordinary shares on issue.

229 In addition, QMS has approximately 8.055 million outstanding performance rights which have been issued to (eligible) key management personnel and other selected senior executives under QMS’s LTIP. Under the relevant LTIP rules, in the event of a proposed change of control of QMS, the Board of QMS has discretion to determine the treatment of any unvested performance rights. The QMS Board has exercised its discretion and has determined to accelerate and vest 5.236 million of the outstanding performance rights subject to the Scheme becoming effective66. The remaining performance rights will lapse on the Scheme becoming effective.

230 Accordingly, for valuation purposes we have adopted 350.0 million fully diluted shares on issue.

Valuation summary 231 Given the above, we have assessed the value of 100% of the equity in QMS on a controlling

interest basis as follows:

QMS – valuation summary(1)

Paragraph Low $m

High $m

QMS Australia 188 441.0 490.0 QMS Sport 199 108.0 117.0 Investment in MediaWorks 220 71.4 78.8 Corporate costs 224 (57.4) (63.4) Value of core business 563.0 622.4 Other assets / (liabilities) 225 (24.0) (24.0) Net cash / (debt) 227 (148.0) (148.0) Equity value – controlling interest basis 391.1 450.5 Fully diluted shares on issue (million) 230 350.0 350.0 QMS value per share – controlling interest basis ($) 1.12 1.29

65 Assuming 344.7 million shares on issue at the time of payment. 66 Being 50% of the FY18 tranche and 75% of both the FY19 and CY19 tranches.

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Note: 1 Rounding differences may exist.

232 We have cross-checked our valuation of QMS for reasonableness by comparing our assessed

value of the equity in QMS (on a per share basis) with the listed market prices of QMS shares on the ASX up to 23 October 2019 (being the last trading day prior to press speculation regarding potential takeover interest in QMS), adjusted for a premium for control.

233 The volume weighted average price (VWAP) for QMS shares (based upon all trading67) in the one and three month periods up to 23 October 2019 were $0.91 and $0.88 respectively68. Empirical evidence from research undertaken by LEA indicates that the average premium paid above the listed market price in successful takeovers in Australia ranges between 30% and 35% (assuming the pre-bid market price does not reflect any speculation of the takeover).

234 Adding a 30% to 35% premium for control to these share prices would therefore result in a theoretical “control” value of $1.14 to $1.23 per share. Our assessed values are broadly consistent with this range.

67 Including for example, block trades, privately negotiated trades, pre-trading and after trading hour market trades. 68 QMS released its half year results to 30 June 2019 and provided CY19 guidance in February 2019 and reaffirmed

this guidance on 23 August 2019. Although the three month VWAP includes trading prior to this date, the announcement did not have any material impact on the listed price of QMS shares, when measured on a VWAP basis.

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VII Evaluation of the Scheme

235 In our opinion, the Scheme is fair and reasonable and in the best interests of QMS Shareholders in the absence of a superior proposal. We have formed this opinion for the reasons set out below.

Assessment of fairness 236 As set out in Section VI, we have assessed the value of QMS on a 100% controlling interest

basis at $1.12 to $1.29 per share.

237 If the Scheme is approved and implemented, QMS Shareholders will receive Cash Scheme Consideration of $1.22 for each QMS share they hold on the Scheme Record Date (14 February 2020).

238 Pursuant to RG 111 the Scheme is “fair” if the value of the Cash Scheme Consideration is equal to, or greater than the value of the securities the subject of the Scheme. This comparison is shown below:

Position of QMS Shareholders

Low

$ per share High

$ per share Mid-point $ per share

Value of Cash Scheme Consideration 1.22 1.22 1.22 Value of 100% of QMS 1.12 1.29 1.21 Extent to which the Cash Scheme Consideration exceeds (or is less than) the value of QMS 0.10 (0.07) 0.01

239 As the Cash Scheme Consideration lies within our assessed valuation range for QMS shares

on a 100% controlling interest basis, in our opinion, the Scheme Consideration is fair to QMS Shareholders when assessed based on the Guidelines set out in RG 111.

Assessment of reasonableness 240 Pursuant to RG 111, a transaction is reasonable if it is fair. Further, in our opinion, if the

Scheme is “fair and reasonable” it must also be “in the best interests” of shareholders.

241 Consequently, in our opinion, the Scheme is also “reasonable” and “in the best interests” of QMS Shareholders in the absence of a superior proposal.

242 However, irrespective of the regulatory obligation to conclude that the Scheme is reasonable simply because it is fair, we have also considered a range of other factors that we consider relevant in assessing whether the Scheme is reasonable and in the best interests of QMS Shareholders, including:

(a) the extent to which a control premium is being paid to QMS Shareholders (b) the extent to which QMS Shareholders are being paid a share of any synergies likely to

be generated pursuant to the potential transaction (c) the listed market price of QMS shares, both prior to and subsequent to the

announcement of the proposed Scheme

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(d) the likely market price of QMS shares if the proposed Scheme is not approved (e) the value of QMS to an alternative offeror and the likelihood of a higher alternative

offer being made for QMS prior to the date of the Scheme Meetings (f) the advantages and disadvantages of the Scheme from the perspective of QMS

Shareholders; and (g) other qualitative and strategic issues associated with the Scheme.

243 These issues are discussed in detail below.

Extent to which a control premium is being paid 244 Research undertaken by LEA indicates that average premiums paid in successful takeovers in

Australia generally range between 30% and 35% above the listed market price of the target company’s shares69 three months prior to the announcement of the bid (assuming no speculation of the takeover is reflected in the pre-bid price). This premium range reflects the fact that:

(a) the owner of 100% of the shares in a company obtains access to all the free cash flows of the company being acquired, which it would otherwise be unable to do as a minority shareholder

(b) the controlling shareholder can direct the disposal of surplus assets and the redeployment of the proceeds

(c) a controlling shareholder can control the appointment of directors, management policy and the strategic direction of the company

(d) a controlling shareholder is often able to increase the value of the entity being acquired through synergies and/or rationalisation savings.

245 We have calculated the premium implied by the Cash Scheme Consideration by reference to the market prices of QMS shares (as traded on the ASX) for periods up to and including 23 October 2019 (being the last trading day prior to press speculation regarding potential takeover interest in QMS).

Implied offer premium relative to recent QMS share prices

QMS share price

$

Implied control premium

% Closing share price on 23 October 2019(1) 0.895 36.3 One month VWAP(2) to 23 October 2019(1) 0.908 34.4 Three month VWAP(2) to 23 October 2019(1)(3) 0.884 38.0

69 After adjusting the pre-bid market prices for the movement in share market indices between the date of the pre-bid

market price and the announcement of the takeover.

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Note: 1 Being the last trading day prior to the announcement of the Scheme. 2 Based upon all trades, including for example, block trades, privately negotiated trades, pre-trading and

after trading hour market trades. 3 QMS released its half year results to 30 June 2019 and provided CY19 guidance in February 2019 and

reaffirmed this guidance on 23 August 2019. Although the three month VWAP includes trading prior to this date, the announcement did not have any material impact on the listed price of QMS shares, when measured on a VWAP basis.

246 Having regard to the above, in our opinion, the Cash Scheme Consideration provides QMS

Shareholders with a premium that is consistent with observed premiums generally paid in comparable circumstances. Accordingly, in our opinion, QMS Shareholders are being compensated for the fact that 100% control of QMS will pass to Quadrant if the Scheme is approved.

Extent to which QMS Shareholders are being paid a share of synergies 247 Quadrant has not provided any specific guidance on the level of synergies it expects to realise

from the acquisition of QMS. However, if the Scheme is approved and implemented, QMS will be delisted from the ASX, resulting in the elimination of listed public company costs (e.g. director fees, listing fees, share registry fees, shareholder communication costs etc). Depending upon the identity of the acquirer, it is conceivable that other synergies (e.g. back office costs savings) could also be generated.

248 We note that our valuation range incorporates a premium for control and that the existence of company cost savings as well as other cost (and revenue) synergies that arise from acquisitions / privatisations are one of the key reasons why bidders pay a premium to acquire a company.

249 Given that the Cash Scheme Consideration falls within our valuation range, it would therefore appear that a proportion of the synergy benefits that may be realised by an acquirer are reflected in the Cash Scheme Consideration.

Recent share prices subsequent to the announcement of the Scheme 250 QMS Shareholders should note that QMS shares have traded on the ASX in the range of

$1.145 to $1.235 per share in the period since the Scheme was announced up to and including 10 December 2019 (and closed at $1.195). The VWAP (based upon all trading70) over the period was $1.218 per share.

251 These share prices are consistent with the Cash Scheme Consideration plus the fully franked Final Dividend of up to 1.3 cents per QMS share for the financial year ending 31 December 2019. In our view, the post announcement trading suggests that the consensus market view is that a superior offer or proposal is unlikely to emerge.

70 Including for example, block trades, privately negotiated trades, pre-trading and after trading hour market trades.

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Likely price of QMS shares if the Scheme is not implemented 252 If the Scheme is not implemented we expect that, at least in the short term, QMS shares will

trade at a significant discount to our valuation and the Cash Scheme Consideration due to the difference between the value of QMS shares on a portfolio basis and their value on a 100% takeover basis. In this regard, we note that QMS shares last traded at $0.895 per share on 23 October 2019 (being the last trading day prior to press speculation regarding potential takeover interest in QMS).

253 If the Scheme is not implemented those QMS Shareholders who wish to sell their QMS shares are therefore likely, at least in the short term, to realise a significantly lower price for their shares than will be payable under the Scheme.

Likelihood of an alternative offer 254 We have been advised by the Directors of QMS that no formal alternative offers have been

received subsequent to the announcement of the Scheme on 29 October 2019.

255 Whilst there has effectively been (and remains) an opportunity for third parties contemplating an acquisition of QMS to table a proposal before the QMS Board, QMS Shareholders should note:

(a) the exclusivity (and break fee) obligations on QMS pursuant to the Agreement, which are summarised in Section I of this report and discussed in further detail in the Scheme Booklet

(b) Quadrant has a relevant interest in 14.9% of QMS’s ordinary shares on issue, comprising the relevant interests of the entities associated with by Mr Nettlefold and Mr O’Neill (which hold 13.4% and 1.4% of QMS’s ordinary shares on issue respectively). In the absence of a superior proposal recommended by the QMS Board, Mr Nettlefold and Mr O’Neill are contractually restricted from voting in favour of, or otherwise supporting, a competing proposal.

256 Although it is possible that an alternate offer may emerge, the factors set out above, in our opinion, diminish the likelihood of this occurring.

Summary of opinion on the Scheme 257 We summarise below the likely advantages and disadvantages for QMS Shareholders if the

Scheme proceeds.

Advantages 258 The Scheme has the following benefits for QMS shareholders:

(a) the Cash Scheme Consideration of $1.22 per share is consistent with our assessed value range for QMS shares on a 100% controlling interest basis. Thus, in our view, QMS Shareholders are being paid an appropriate price to compensate them for the fact that control of QMS will pass to Quadrant if the Scheme is approved

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(b) the Cash Scheme Consideration represents a significant premium to the market prices of QMS prior to the announcement of the Scheme. Furthermore, the premium is consistent with observed premiums generally paid to target company shareholders in comparable circumstances

(c) if the Scheme does not proceed, and in the absence of an alternative offer or proposal, the price of QMS shares is likely to trade at a significant discount to our valuation and the Cash Scheme Consideration due to the portfolio nature of individual shareholdings.

Disadvantages 259 QMS Shareholders should note that if the Scheme is implemented they will no longer hold an

interest in QMS. QMS Shareholders will therefore not participate in any future value created by the company over and above that reflected in the Cash Scheme Consideration.

260 However, as our assessed value of QMS shares is consistent with the Cash Scheme Consideration, in our opinion, the present value of QMS’s future potential is reflected in the Cash Scheme Consideration.

Conclusion on the Scheme 261 Given the above analysis, we consider that the advantages of the Scheme outweigh the

disadvantages from the perspective of QMS Shareholders. Consequently, in our view, the acquisition of QMS shares by Quadrant under the Scheme is fair and reasonable and in the best interests of QMS Shareholders in the absence of a superior proposal.

Other matters 262 QMS Shareholders should be aware that the Rollover Shareholders are being provided with

the opportunity to retain an interest in the QMS business by receiving some Scrip Consideration71. In this regard it should be noted that:

(a) their QMS shares will be exchanged for HoldCo equity at a deemed value of $1.22 per share, which is consistent with the Cash Scheme Consideration (i.e. the economic substance is the same as receiving $1.22 in cash per share and investing the proceeds in HoldCo72)

(b) HoldCo’s only asset will be the shares in QMS. Therefore, the value of 100% of HoldCo will be equal to our assessed value of QMS73, less the debt used to finance the acquisition of the QMS shares and the transaction costs incurred. Accordingly, in our opinion, the market value of HoldCo equity on a controlling interest basis (immediately

71 The Rollover Shareholders have entered into binding contractual commitments, in favour of BidCo, to elect to


72 Ignoring any leakage that may occur due to, inter alia, taxation etc. 73 As Quadrant does not currently own any other out-of-home media businesses, we do not expect Quadrant to

generate any significant synergy benefits over and above those already reflected in our assessed market value of QMS.

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post implementation of the Scheme) is equivalent to $1.12 to $1.29 per QMS share (being our assessed value range74)

(c) the HoldCo Shares to be issued to the Rollover Shareholders (75% ordinary and 25% preference) will have a number of rights and obligations attaching to them and will be subject to a number of risk factors (which are outlined in Section 7.8 of the Scheme Booklet). For example:

Ordinary shares (i) have voting rights (one vote per share) and also provide the right to appoint

directors to the Board of HoldCo. However, the Rollover Shareholders will only hold approximately 16% of HoldCo ordinary shares (in total) and will therefore be subject to the risks that are inherent in minority shareholdings with no substantial influence over the majority of decisions affecting HoldCo (i.e. the Rollover Shareholders will have a minority rather than a controlling interest in HoldCo)

(ii) whilst we understand that HoldCo ordinary shares carry an entitlement to dividends, given the structure of the investment and the level of HoldCo debt, the timing of the commencement of dividend payments (if any) is uncertain

(iii) HoldCo is an unlisted Australian proprietary company and there will be no public market for the trading of HoldCo ordinary shares, nor is there expected to be any such market in the near future. The ability to dispose of HoldCo ordinary shares is also significantly restricted75, which will result in HoldCo ordinary shares being substantially illiquid

Preference shares (iv) do not have voting rights but do carry an entitlement to an annual coupon76,

which will accumulate to the extent it is not paid each year (v) rank ahead of ordinary shares in the event of a liquidation (vi) at the election of HoldCo, some or all of the preference shares may be redeemed.

Otherwise, the ability of the holder to dispose or transfer HoldCo preference shares will be subject to the same restrictions applied to HoldCo ordinary shares (i.e. the ability to dispose or transfer will be significantly restricted).

Given the factors outlined in the Scheme Booklet, in our view, the HoldCo Shares to be issued to the Rollover Shareholders as Scrip Consideration (immediately post implementation of the Scheme) should prima facie reflect both minority and lack of marketability discounts, albeit the discounts applicable to the individual components (i.e. ordinary and preference shares) will differ77. Even assuming no discount is applied to the preference shares78, the discount attributable to the ordinary shares can be no

74 Ignoring any transaction costs incurred in HoldCo. 75 HoldCo ordinary shares cannot be transferred other than with the consent of Quadrant, or in connection with other

customary transfer provisions (such as the drag-along and tag-along provisions). 76 Which is proposed to be a small margin above the interest rate applying to HoldCo’s senior debt. 77 The key material differences between the preference and ordinary shares are that the preference shares carry no

voting rights, are entitled to an annual coupon (only) and rank ahead of ordinary shares on a liquidation. 78 Which, in our view, represents the best case scenario as the preference shares should be considered to be quasi

equity (for which a discount would ordinarily apply).

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greater than 7.0% in order for the (high end of the) Scrip Consideration to have an aggregate value of $1.22 per QMS share (on an equivalent basis)79. This is demonstrated as follows:

Theoretical example of value of Scrip Consideration given specific assumptions(1)(2) Low High Paragraph $ $ HoldCo ordinary shares QMS value per share – controlling interest basis 231 1.12 1.29 Multiplied by % issued as HoldCo ordinary shares(3) 75.0 75.0 Value of HoldCo ordinary shares – controlling interest basis 0.84 0.97 7.0% discount for lack of control and lack of marketability (0.06) (0.07) Value of HoldCo ordinary shares – minority interest basis A 0.78 0.90 HoldCo preference shares QMS value per share – controlling interest basis 231 1.12 1.29 Multiplied by % issued as HoldCo preference shares(3) 25.0 25.0 Value of HoldCo preference shares – no assumed discounts(4) B 0.28 0.32 Aggregate value of Scrip Consideration(2) A + B 1.06 1.22 Note: 1 Rounding differences may exist. 2 Calculated on a QMS share equivalent basis, assuming a discount for minority and lack of

marketability of no more than 7.0% is applied to the ordinary HoldCo shares and no discount is applied to HoldCo preference shares.

3 Mr Nettlefold and Mr O’Neill will collectively receive 75.0% of their HoldCo shares as ordinary shares with the remaining 25.0% being preference shares.

4 In our view, this represents the best case scenario as the preference shares should be considered to be quasi equity (for which a discount would ordinarily apply).

263 The discount applied to the ordinary shares in the table above is well below the combined

level of discounts generally applied to minority interests in privately held (i.e. unlisted) entities80. Accordingly, in our view, the market value of the HoldCo shares to be issued to the Rollover Shareholders as Scrip Consideration (immediately post implementation of the Scheme) is no greater than $1.22 per QMS share (on an equivalent basis).

79 The low and mid-point aggregate values are still below $1.22 per QMS share (on an equivalent basis). 80 The minority interest discount associated with an assumed control premium of 30% to 35% is in the order of 23%

to 26% (before the addition of any lack of marketability discount).

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Appendix A

81

Financial Services Guide

Lonergan Edwards & Associates Limited 1 Lonergan Edwards & Associates Limited (ABN 53 095 445 560) (LEA) is a specialist

valuation firm which provides valuation advice, valuation reports and independent expert’s reports (IER) in relation to takeovers and mergers, commercial litigation, tax and stamp duty matters, assessments of economic loss, commercial and regulatory disputes.

2 LEA holds Australian Financial Services Licence No. 246532.

Financial Services Guide 3 The Corporations Act 2001 (Cth) (Corporations Act) authorises LEA to provide this Financial

Services Guide (FSG) in connection with its preparation of an IER to accompany the Scheme Booklet to be sent to QMS Shareholders in connection with the Scheme.

4 This FSG is designed to assist retail clients in their use of any general financial product advice contained in the IER. This FSG contains information about LEA generally, the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the IER, and if complaints against us ever arise how they will be dealt with.

Financial services we are licensed to provide 5 Our Australian Financial Services Licence allows us to provide a broad range of services to

retail and wholesale clients, including providing financial product advice in relation to various financial products such as securities, derivatives, interests in managed investment schemes, superannuation products, debentures, stocks and bonds.

General financial product advice 6 The IER contains only general financial product advice. It was prepared without taking into

account your personal objectives, financial situation or needs.

7 You should consider your own objectives, financial situation and needs when assessing the suitability of the IER to your situation. You may wish to obtain personal financial product advice from the holder of an Australian Financial Services Licence to assist you in this assessment.

Fees, commissions and other benefits we may receive 8 LEA charges fees to produce reports, including this IER. These fees are negotiated and

agreed with the entity who engages LEA to provide a report. Fees are charged on an hourly basis or as a fixed amount depending on the terms of the agreement with the entity who engages us. In the preparation of this IER, LEA is entitled to receive a fee estimated at $200,000 plus GST.

9 Neither LEA nor its directors and officers receives any commissions or other benefits, except for the fees for services referred to above.

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10 All of our employees receive a salary. Our employees are eligible for bonuses based on overall performance and the firm’s profitability, and do not receive any commissions or other benefits arising directly from services provided to our clients. The remuneration paid to our directors reflects their individual contribution to the company and covers all aspects of performance. Our directors do not receive any commissions or other benefits arising directly from services provided to our clients.

11 We do not pay commissions or provide other benefits to other parties for referring prospective clients to us.

Complaints 12 If you have a complaint, please raise it with us first, using the contact details listed below.

We will endeavour to satisfactorily resolve your complaint in a timely manner.

13 If we are not able to resolve your complaint to your satisfaction within 45 days of your written notification, you are entitled to have your matter referred to the Australian Financial Complaints Authority (AFCA), an external complaints resolution service. You will not be charged for using the AFCA service.

Contact details 14 LEA can be contacted by sending a letter to the following address:

Level 7 64 Castlereagh Street Sydney NSW 2000 (or GPO Box 1640, Sydney NSW 2001)

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Qualifications, declarations and consents

Qualifications 1 LEA is a licensed investment adviser under the Corporations Act. LEA’s authorised

representatives have extensive experience in the field of corporate finance, particularly in relation to the valuation of shares and businesses and have prepared hundreds of IERs.

2 This report was prepared by Mr Craig Edwards and Mr Nathan Toscan, who are each authorised representatives of LEA. Mr Edwards and Mr Toscan have over 20 years and 15 years’ experience respectively in the provision of valuation advice (and related advisory services).

Declarations 3 This report has been prepared at the request of the Directors of QMS to accompany the

Scheme Booklet to be sent to QMS Shareholders. It is not intended that this report should serve any purpose other than as an expression of our opinion as to whether or not the Scheme is fair and reasonable and in the best interests of QMS Shareholders.

Interests 4 At the date of this report, neither LEA, Mr Edwards nor Mr Toscan have any interest in the

outcome of the Scheme. With the exception of the fee shown in Appendix A, LEA will not receive any other benefits, either directly or indirectly, for or in connection with the preparation of this report.

5 LEA has had no prior business or professional relationship with QMS, Quadrant or the Rollover Shareholders prior to the preparation of this report.

Indemnification 6 As a condition of LEA’s agreement to prepare this report, QMS agrees to indemnify LEA in

relation to any claim arising from or in connection with its reliance on information or documentation provided by or on behalf of QMS which is false or misleading or omits material particulars or arising from any failure to supply relevant documents or information.

Consents 7 LEA consents to the inclusion of this report in the form and context in which it is included in

the Scheme Booklet.

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Trading evidence

Out-of-home advertising 1 A summary of the key trading metrics of ASX and international securities exchange listed

companies that provide out-of-home advertising products and services are set out below:

Trading evidence – listed out-of-home advertising companies(1)

Market EV / EBITDA(4)(5) Price / NPATA(4)(5)

Company Year end

cap(2) A$m

EV(2)(3) A$m

CY19 x

CY20 x

CY21 x

CY19 x

CY20 x

CY21 x

Australian companies oOh!media(6) 31 Dec 681 1,087 8.4 7.3 6.9 14.8 11.9 10.7 QMS 31 Dec 308 473 7.3 6.1 5.6 12.6 10.7 9.4 International companies Lamar Advertising 31 Dec 12,077 16,479 14.4 13.9 13.5 21.9 20.8 19.2 JCDecaux 31 Dec 8,563 10,721 8.3 7.9 7.6 20.1 18.5 16.9 Ströer SE 31 Dec 6,619 9,411 10.5 9.7 9.1 19.6 18.3 16.8 Clear Channel Outdoor 31 Dec 1,753 8,966 10.4 9.8 8.9 nm nm nm Outfront Media 31 Dec 5,187 8,704 11.5 10.9 10.3 22.5 18.8 17.4 APG SGA 31 Dec 1,282 1,256 13.5 13.9 13.9 21.0 21.7 21.7 Note: 1 EV and earnings multiples as at 6 November 2019, based upon latest available information. QMS EV

and market capitalisation as at 23 October 2019 (being the last trading day prior to press speculation regarding potential takeover interest in QMS).

2 Foreign currencies have been converted to AUD at the exchange rate prevailing as at 6 November 2019.

3 EV includes net debt (interest bearing liabilities less non-restricted cash), net derivative liabilities, net pension liabilities, market capitalisation adjusted for material option dilution and excludes surplus assets (as well as operating lease liabilities recognised under AASB / IFRS 16).

4 Net profit after tax but before amortisation of acquired intangibles. Unless otherwise noted, the multiples are based on Bloomberg broker average forecasts (excluding outliers and outdated forecasts).

5 oOh!media multiples are based on average analyst estimates from Canaccord, Credit Suisse and Morningstar (26 August 2019) and JP Morgan, Macquarie and Morgans Financial (27 August 2019). QMS multiples are based on average estimates from Canaccord (25 August 2019), CCZ Equities (4 September 2019) and EL&C Baillieu (9 September 2019).

6 We note that on 3 December 2019 (i.e. subsequent to our analysis on 6 November 2019), oOh!media increased its EBITDA guidance for CY19. oOh!media’s CY19 and CY20 EBITDA multiples have increased accordingly and as at the date of this report approximate 9.5 times and 8.5 times respectively.

nm – not meaningful. Source: Bloomberg, company announcements and LEA analysis.

2 Brief descriptions of each of the above companies follow.

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Australian companies

oOh!media Limited 3 oOh!media is an out-of-home media company engaged in the provision of outdoor advertising

sites and services in Australia and NZ. The company’s portfolio comprises static and digital signs including roadside billboards, street furniture, rail, retail signs in shopping centres, airport advertising and media in place-based locations such as CBD office towers, car parks, cafés, bars and pubs, fitness and social sporting venues (including gymnasiums) as well as universities. In September 2018, oOh!media completed the acquisition of Adshel from HT&E Limited which added a portfolio of 21,000 poster faces and more than 800 digital screens across street furniture and rail assets to oOh!media’s out-of-home portfolio.

QMS Media Limited 4 Refer to the profile of QMS in Section III.

International companies

Lamar Advertising Co 5 Lamar Advertising is one of the largest outdoor advertising companies in the world, with

more than 360,000 displays across the US and Canada. The company operates across a variety of advertising formats including billboards, interstate highway exit logo signs, transit and airports. In addition to its traditional out-of-home advertising portfolio, Lamar Advertising is also the largest provider of digital billboards in the US, with over 3,500 digital billboard sites.

JCDecaux SA 6 JCDecaux is the largest provider of street furniture and transport advertising worldwide. The

company provides out-of-home advertising services across its portfolio of street furniture, billboards, transport and airport advertising assets which span across more than 80 countries and reach over 410 million people. In 2018, JCDecaux acquired APN Outdoor, a leading provider of out-of-home advertising sites and services in Australia and NZ across a variety of advertising formats including billboards (classic and digital), transit, airport and rail.

Ströer SE & Co KGaA 7 Ströer SE is a German listed out-of-home advertising provider, with a portfolio of over

300,000 advertising spaces which are primarily located in Germany. The company is the leading provider of out-of-home advertising in Germany and also has operations throughout Europe. Ströer SE operates across a variety of out-of-home formats including billboards, transport and digital media. The company also commercialises and operates several websites in German speaking countries.

Clear Channel Outdoor Holdings Inc. 8 Clear Channel Outdoor is one of the world’s largest outdoor advertising companies with more

than 450,000 displays in over more than 31 countries across Asia, Europe, Latin America and North America. The company is based in the US and provides out-of-home advertising through a range of formats including billboards, street furniture, transit, airports and retail displays. Clear Channel Outdoor is majority owned by iHeartCommunications Inc. which,

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through its subsidiaries, holds approximately 89.5% of the A class and B class shares on issue81.

Outfront Media Inc. 9 Outfront Media is one of the largest out-of-home advertising companies in North America

with a portfolio of over 500,000 classic and digital displays located in high traffic locations in the US and Canada. The company provides a range of out-of-home advertising across formats such as billboards, buses, rail and street furniture. As of 31 December 2018, Outfront Media had displays in the 25 largest markets in the US and over 140 markets across the US and Canada.

APG SGA SA 10 APG SGA is a Switzerland listed out-of-home advertising company operating a portfolio of

advertising spaces. The company is Switzerland’s leading out-of-home media company and operates across a variety of out-of-home advertising formats including billboards, airport, mountain, traffic and rail. APG SGA predominately operates in Switzerland but also has operations in Serbia.

Traditional media 11 A summary of the key trading metrics of Australian and NZ listed companies that provide

traditional media (i.e. television, radio and print) services is set out below:

Trading evidence – listed traditional media companies(1)

Market EV / EBITDA(4)

Company Year end

cap(2) A$m

EV(2)(3) A$m

FY19 x

FY20 x

FY21 x

Nine Entertainment Co Holdings 30 Jun 3,164 3,503 8.3 7.1 6.7 Seven West Media 30 Jun 573 1,077 4.4 4.7 5.0 Southern Cross Media Group 30 Jun 692 969 6.1 6.6 6.2 SKY Network Television 30 Jun 359 535 2.4 2.8 3.2 HT&E 31 Dec 468 425 5.4 5.2 5.0 NZME 31 Dec 69 153 2.9 3.0 3.2 Pacific Star Network 30 Jun 71 74 6.2 na na Prime Media Group 30 Jun 61 68 1.8 2.8 2.6

81 iHeartCommunications Inc. was formerly known as CC Media Holdings Inc.

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Note: 1 EV and earnings multiples as at 6 November 2019, based upon latest available information. Seven

West Media and Prime Media Group EV and market capitalisation as at 17 October 2019 (being the last trading day prior to the announcement of Seven West Media’s proposal to acquire Prime Media Group).

2 Foreign currencies have been converted to AUD at the exchange rate prevailing as at 6 November 2019.

3 EV includes net debt (interest bearing liabilities less non-restricted cash), net derivative liabilities, net pension liabilities, market capitalisation adjusted for material option dilution and excludes surplus assets (as well as operating lease liabilities recognised under AASB / IFRS 16).

4 FY19 earnings are based on actual earnings with the exception of HT&E and NZME which are based on Bloomberg average analyst forecasts for the year ending 31 December 2019. The EBITDA multiple for Nine Entertainment for FY19 is based on its pro-forma results (which assumes the merger with Fairfax took place at the beginning of the financial year).

na – not available. Source: Bloomberg, company announcements and LEA analysis.

12 Brief descriptions of each of the above companies follow.

Nine Entertainment Co Holdings Ltd 13 Nine Entertainment is Australia’s largest traditional media company with holdings in radio

and television broadcasting, newspaper publications and digital media. The company operates free-to-air television channels including 9HD, 9Gem, 9Go! and 9Life as well as the online video on demand TV service 9Now. In addition to its television business, Nine Entertainment owns newspaper publishing businesses (The Sydney Morning Herald, The Age and The Australian Financial Review), digital only publishing assets (such as nine.com.au, 9Honey and Pedestrian.TV) and investments in Domain, Stan, CarAdvice and Macquarie Media.

Seven West Media Ltd 14 Seven West Media is one of Australia’s leading integrated media companies, with a market

leading presence in broadcast television and newspaper publishing and online. The company operates across a number of television brands including Seven, 7TWO, 7mate, 7flix, 7food network and is home to some of the biggest content brands including My Kitchen Rules, House Rules, Home and Away and Sunrise. In addition to its television business, Seven West Media operates the publishing brands The West Australian and The Sunday Times. The company’s registered office is in Perth, Western Australia and it employs over 2,800 staff.

Southern Cross Media Group Ltd 15 Southern Cross Media Group, the parent company of Southern Cross Austereo, is one of

Australia’s major media service providers through its radio, television and digital assets. Southern Cross Austereo operates some 76 analogue radio stations across metropolitan and regional Australia plus an additional 10 digital radio stations in Australia’s capital cities under the Triple M and Hit networks brands. In addition to its radio operations, Southern Cross Austereo broadcasts 92 free-to-air television signals across regional Australia with Nine Network, Seven Network and Network Ten programming and operates the Australian podcast network PodcastOne Australia.

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SKY Network Television Ltd 16 SKY Network Television is a leading NZ entertainment company that provides free-to-air

TV, pay TVand multi-channel services. Sky Network Television operates the NZ free-to-air TV network Prime and provides a variety of sport and entertainment content through its pay TV network. As at 30 June 2019, Sky Network Television had 778,840 subscribers across its satellite and online streaming services Sky Sport Now and NEON making it the largest pay TV platform in NZ.

HT&E Ltd 17 HT&E (formerly known as APN News & Media) is a leading media and entertainment

business that operates a portfolio of radio, audio and digital businesses in Australia. HT&E owns the Australian Radio Network, one of the leading radio broadcasters in Australia, which operates across a number of brands including the KIIS Network, Pure Gold Network and The Edge as well as the digital platform iHeartRadio. In addition to its Australian operations, HT&E operates a portfolio of out of home advertising assets in Hong Kong which comprises a portfolio of some 450 outdoor advertising panels, tram shelters on Hong Kong Island and a growing network of taxi body advertising.

NZME Ltd 18 NZME is a NZ based media company that operates across a portfolio of print, radio, digital

and e-commerce brands. The company’s print business produces daily newspaper publications such as The NZ Herald, Rotorua Daily Post and Northern Advocate which reach over a million readers per week and a publishes a number of magazine titles including Canvas, TimeOut, Spy and Sunday Travel. NZME is also the second largest radio operator in NZ, with a weekly radio audience of some 2.0 million listeners across its network of radio brands including Newstalk ZB, Radio Hauraki, Radio Sport, the Hits, Flava and Mix.

Pacific Star Network Ltd 19 Pacific Star Network is a specialist sports media and entertainment business that produces

multi-platform content across radio, mobile, television, digital and print assets. The company operates a network of 28 owned and 200 supplied radio stations which distribute live sport and non-live sport content that reaches approximately 3.0 million listeners across Australia each week. Pacific Start Network also provides in stadium LED signage and big screen advertising to a number of sporting stadia across Australia as well as a number of complementary sport services including talent management, sport publications and television production services.

Prime Media Group Ltd 20 Prime Media Group is a regional TV broadcaster with a viewing area that covers northern and

southern New South Wales, the Australian Capital Territory, Victoria, the Gold Coast and all of regional Western Australia. The company primarily operates the free-to-air TV networks PRIME7 and GWN7 which broadcasts content largely through a program supply agreement with Seven West Media. Prime Media Group is headquartered in Pyrmont, Sydney and employs approximately 375 full time equivalent staff.

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Transaction evidence

Out-of-home transactions

APN Outdoor Group Limited 1 On 26 June 2018, APN Outdoor announced that it and JCDecaux had entered into a Scheme

Implementation Deed under which a wholly owned subsidiary of JCDecaux would acquire 100% of the issued shares in APN Outdoor. At the time of the acquisition, APN Outdoor was a leading provider of out-of-home advertising sites and services in Australia and NZ across a variety of advertising formats including billboard (classic and digital), transit, airport and rail.

Adshel Street Furniture (100%) 2 On 25 June 2018, oOh!media announced that it had entered into a binding agreement with

HT&E to acquire its out-of-home advertising business Adshel for consideration of $570 million. At the time of the acquisition, Adshel operated approximately 22,000 static and digital panels across Australia and NZ in street furniture, rail and petrol stations / convenience store categories. oOh!media intended to fund the acquisition via a $260 million of new debt and a $330 million capital raising (i.e. institutional and retail entitlement offer).

Adshel Street Furniture (50%) 3 On 25 October 2016, APN News & Media announced the acquisition of the remaining 50% of

Adshel for consideration of $268.4 million. At the time of the acquisition, Adshel operated approximately 22,000 static and digital panels across Australia and NZ in street furniture, rail and petrol stations / convenience store categories. APN News & Media funded the acquisition through a fully underwritten equity raising of $273 million comprised of an institutional placement and follow-on entitlement offer.

Executive Channel International 4 oOh!media announced the acquisition of Executive Channel International (ECN) on

11 October 2016 (the transaction was completed on 1 November 2016). At the time of the acquisition, ECN operated a network of over 1,020 installations in CBD office towers and car park environments across Australia. oOh!media funded the acquisition by a capital raising comprised of a $60.0 million institutional placement (at a placement price of $4.75) and a share purchase plan made available to eligible shareholders.

iSite Limited 5 QMS Media announced the acquisition of iSite on 1 December 2015 for acquisition

consideration of $44.4 million. At the time, iSite operated some 450 static billboards, three digital billboards (with seven more in the pipeline for development by the end of March 2016) and advertising spaces on over 1,500 buses across NZ. In addition, the company also had media contracts with two of NZ’s airports (Wellington and Queenstown). QMS Media funded the acquisition by a fully-underwritten 1 for 5 pro-rata accelerated non-renounceable entitlement offer to raise approximately $50.3 million.

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APN Outdoor sale (48%) to Quadrant 6 APN News & Media announced on 22 October 2013 that it had entered into exclusive

discussions with Quadrant to sell its remaining 48% interest in APN Outdoor for $69 million. The transaction completed in January 2014. At the time of the acquisition, APN Outdoor operated a network of over 50,000 digital and static panels across roadside billboards, transit, rail and airport formats in Australia and NZ.

Eye Corp Pty Limited 7 oOh!media announced the acquisition of Eye Corp Pty Limited (owned by Ten Network

Holdings) on 31 October 2012 for $98 million, plus deferred consideration of $14 million payable three years post completion82. Although the transaction concerned the sale of the Australian, NZ, US, UK and Indonesian operations, it should be noted that Ten Network Holdings retained specific elements of the Australian operations and also agreed to assist oOh!media with the on sale of the US and UK operations.

APN Outdoor JV with Quadrant 8 On 23 February 2012, Quadrant and APN News & Media (now known as HT&E) formed a

52:48 outdoor advertising JV to operate in Australia and NZ. The JV retained the APN Outdoor name and included all of APN News & Media’s wholly owned outdoor advertising businesses in Australia and NZ as well as APN News & Media’s 50% interest in Rainbow Premium Outdoor (in Indonesia)83. The transaction valued APN Outdoor at $272 million on an enterprise value basis and represented an EV / CY11 EBITDA multiple of 7.7 times.

oOh!media 9 CHAMP Private Equity announced that it had entered into a scheme of arrangement with

oOh!media on 13 December 2011, pursuant to which it would acquire all the shares that it did not already own. The consideration comprised a choice of cash of $0.325 per share or mixed consideration consisting of $0.10 cash per share plus one Class B share in an unlisted exempted holding company incorporated in the Cayman Islands. The cash consideration represented a premium of 92% over the one-month VWAP.

Radio transactions

Redwave 10 On 18 October 2019, Southern Cross Austereo announced that it proposed to acquire the

Western Australian regional radio business (Redwave) of Seven West Media Group. At the time of the acquisition, Redwave Media operated the regional radio stations Red FM and Spirit FM, which had licences in Broome, Geraldton, Karratha, Port Headland and Southwest / Bunbury.

82 We note that this was subsequently paid in 2014. 83 APN News & Media’s 50% ownership in Adshel and Hong Kong operations (Buspak and Cody) were excluded

from the JV transaction.

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Macquarie Media 11 On 12 August 2019, Nine Entertainment announced its intention to acquire all of the shares in

Macquarie Media that it did not already own84. At the time of the acquisition, Macquarie Media was an Australian media company that operated seven metropolitan radio stations in Sydney, Melbourne, Brisbane and Perth.

Radio 96FM Perth 12 On 22 December 2014, APN News & Media (now known as HT&E) announced it had

reached an agreement with Fairfax Media to acquire the Perth Radio station 96FM. At the time of the acquisition, 96FM was a successful radio operator in Perth with a target audience of 25 to 54 year old listeners.

Australian Radio Network (50%) 13 On 19 February 2014, APN News & Media announced that it had entered into an agreement

with Clear Channel Communications to acquire the remaining 50% of Australian Radio Network and The Radio Network. At the time of the acquisition, Australian Radio Network owned or had investments in 12 radio stations in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth which broadcast to over four million listeners each week and The Radio Network operated seven core radio brands across NZ which broadcast to approximately 1.7 million listeners each week.

84 At the time of the transaction, Nine Entertainment held 54.4% of the shares in Macquarie Media which it had

acquired through the acquisition of Fairfax Media Limited in December 2018.

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Glossary

Term Meaning AASB Australian Accounting Standards Board ACCC Australian Competition and Consumer Commission AFCA Australian Financial Complaints Authority AFL Australian Football League Agreement Scheme Implementation Deed dated 29 October 2019 APAC Australian Pacific region APN Outdoor APN Outdoor Group Limited ASIC Australian Securities & Investments Commission ASX Australian Securities Exchange A$ / AUD Australian dollars BBSY Bank Bill Swap Bid rate BidCo / the Bidder Shelley BidCo Pty Ltd CAGR Compound annual growth rate Cash Scheme Consideration $1.22 cash per QMS share CBD Central business district CEASA Commercial Economic Advisory Service of Australia CEO Chief Executive Officer Corporations Act Corporations Act 2001 (Cth) Corporations Regulations Corporations Regulations 2001 CY Calendar year DCF Discounted cash flow DOOH Digital out of home EBIT Earnings before interest and tax EBITA Earnings before interest, tax and amortisation of acquired intangibles EBITDA Earnings before interest, tax depreciation and amortisation ECN Executive Channel International EPS Earnings per share ETC ETC Media Limited EV Enterprise value Final Dividend Dividend of up to 1.3 cents per QMS share for the financial year ending

31 December 2019 FSG Financial Services Guide FY Financial year General Scheme Meeting Scheme meeting of QMS shareholders, excluding the Rollover Shareholders GfK Growth from Knowledge Gomeeki Gomeeki Operations Pty Ltd HoldCo The ultimate holding company of BidCo HoldCo Shares Shares in HoldCo, comprising ordinary and preference shares (note that

Rollover Shareholders will receive 75.0% of their HoldCo Shares as ordinary shares with the remaining 25.0% being preference shares)

HY Financial half year IER Independent expert’s report IFRS International Financial Reporting Standards IPO Initial public offering iSite iSite Media Limited JV Joint venture LEA Lonergan Edwards & Associates Limited LTI Long term incentive LTIP Long term incentive program

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Term Meaning LTM Last twelve months MediaWorks Mediaworks New Zealand MOVE Measurement of Outdoor Visibility and Exposure Mr Nettlefold Mr Barclay Nettlefold Mr O’Neill Mr John O’Neill NFL National Football League NPAT Net profit after tax NPV Net present value NZ New Zealand NZ$ / NZD NZ dollar NZME New Zealand Media and Entertainment Oaktree Oaktree Capital Management OAMM Out and About Marketing and Media OIO NZ Overseas Investment Office of New Zealand OMA Outdoor Media Association oOh!media oOh!Media Limited PBT Profit before tax QMS / the Company QMS Media Limited QMS Australia Australian operating division of the Company QMS NZ QMS New Zealand QMS Shareholders QMS shareholders, excluding entities associated with Mr Nettlefold and

Mr O’Neill QMS Sport Operating division of the Company QMS Sport Australia Australian advertising business of QMS Sport division (previously OAMM) Quadrant Quadrant Private Equity and its institutional partners RG 111 Regulatory Guide 111 – Content of expert reports Rollover Shareholders Entities associated with Mr Nettlefold and Mr O’Neill Rollover Shareholders Scheme Meeting

Scheme meeting of Rollover Shareholders only

Rpple Rpple Media Pty Ltd Scheme Scheme of arrangement between QMS and its shareholders Scheme Meetings Court convened Scheme meetings (comprising the General Scheme Meeting

and the Rollover Shareholders Scheme Meeting) Scheme Record Date 14 February 2020 Scrip Consideration Shares in the ultimate holding company of BidCo (i.e. HoldCo) Sportsmate Sportsmate Technologies Pty Ltd Stella Vista Wholly owned subisidary of TGIE STI Short term incentive Stride Stride Sports Management Pty Ltd TGI TGI Systems Corporation TGIE TGI Europe GmbH TLA TLA Worldwide (Aust) Pty Ltd TSR Total shareholder return TV Free to air television and subscription television UK United Kingdom US United States of America US$ / USD US dollars VWAP Volume weighted average price WANOS Weighted average number of shares outstanding YOY Year on year

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ANNEXURE B – SCHEME OF ARRANGEMENT QMS MEDIA LIMITED | SCHEME BOOKLET 183

ANNEXURE BSCHEME OF ARRANGEMENT

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ANNEXURE B – SCHEME OF ARRANGEMENTQMS MEDIA LIMITED | SCHEME BOOKLET184

Scheme of arrangement QMS Media Limited Each person registered as a holder of fully paid ordinary shares in QMS as at the Scheme Record Date

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Contents Page

1 Defined terms and interpretation 1

1.1 Defined terms 1

1.2 Interpretation 1

2 Preliminary matters 1

3 Conditions 2

3.1 Conditions precedent 2

3.2 Conditions precedent and operation of clause 4 2

3.3 Joint Certificates 2

3.4 Termination and End Date 2

4 Implementation of this Scheme 3

4.1 Lodgement of Court orders with ASIC 3

4.2 Transfer of Scheme Shares 3

5 Scheme Consideration 3

5.1 Entitlement to Scheme Consideration 3

5.2 Election procedure 4

5.3 Determination of Scheme Consideration 4

5.4 Provision of Cash Consideration 5

5.5 Provision of Scrip Consideration 6

5.6 Joint holders 6

5.7 Cancellation and re-issue of cheques 6

5.8 HoldCo Securities 7

5.9 Unclaimed monies 7

5.10 Orders of a court 7

5.11 Fractional entitlements and share splitting or division 7

6 Dealings in QMS Shares 8

6.1 Determination of Scheme Shareholders 8

6.2 QMS Share Register 9

7 Quotation of QMS Shares 9

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8 General Scheme provisions 10

8.1 Consent to amendments to this Scheme 10

8.2 Scheme Shareholders’ agreements and warranties 10

8.3 Title to and rights in Scheme Shares 11

8.4 Appointment of sole proxy 11

8.5 Authority given to QMS 12

8.6 Binding effect of this Scheme 12

9 General 12

9.1 Stamp duty 12

9.2 Consent 12

9.3 Enforcement of Deed Poll 12

9.4 Notices 13

9.5 Governing law and jurisdiction 13

9.6 Further action 13

9.7 No liability when acting in good faith 13

Schedule 1 — Dictionary 14

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Gilbert + Tobin page | 1

Parties

1 QMS Media Limited ACN 603 037 341 of 214-220 Park Street, South Melbourne, Victoria 3205 (QMS)

2 Each person registered as a holder of fully paid ordinary shares in QMS as at the Scheme Record Date (Scheme Shareholders)

The parties agree

1 Defined terms and interpretation

1.1 Defined terms

A term or expression starting with a capital letter which is defined in the dictionary in Schedule 1 has the meaning given to it in the dictionary.

1.2 Interpretation

The interpretation clause in Schedule 1 sets out rules of interpretation for this Scheme.

2 Preliminary matters

(a) QMS is an Australian public company limited by shares, and has been admitted to the official list of ASX. QMS Shares are quoted for trading on the ASX.

(b) As at 28 October 2019, there were 344,737,836 QMS Shares that are quoted for trading on the ASX.

(c) Bidder is an Australian proprietary company limited by shares and incorporated in New South Wales.

(d) If this Scheme becomes Effective:

(i) Bidder must provide or procure the provision of the Scheme Consideration to Scheme Shareholders in accordance with this Scheme and the Deed Poll; and

(ii) all the Scheme Shares, and all the rights and entitlements attaching to them as at the Implementation Date, will be transferred to Bidder and QMS will enter the name of Bidder in the QMS Share Register in respect of all the Scheme Shares.

(e) Bidder and QMS have entered into the Scheme Implementation Deed in respect of (among other things) the implementation of this Scheme.

(f) This Scheme attributes actions to Bidder and Holdco but does not itself impose any obligations on it to perform those actions. By executing the Deed Poll, Bidder and Holdco have agreed to perform the actions attributed to them under this Scheme. By executing the Deed Poll, Bidder and Holdco agree to perform their obligations under the Deed Poll, including delivery of the Scheme Consideration in accordance with the terms of this Scheme.

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3 Conditions

3.1 Conditions precedent

This Scheme is conditional on and will not become Effective until and unless the following conditions precedent are satisfied:

(a) all the conditions in clause 3.1 of the Scheme Implementation Deed (other than the condition in clause 3.1(f) of the Scheme Implementation Deed relating to Court approval of this Scheme) are satisfied or waived in accordance with the terms of the Scheme Implementation Deed by the Delivery Time;

(b) neither the Scheme Implementation Deed nor the Deed Poll is terminated in accordance with its terms by the Delivery Time;

(c) this Scheme is approved by the Court at the Second Court Hearing under section 411(4)(b) of the Corporations Act, including with any alterations made or required by the Court under section 411(6) of the Corporations Act as are acceptable to QMS and Bidder;

(d) such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to this Scheme as are acceptable to QMS and Bidder are satisfied (each acting reasonably); and

(e) the order of the Court made under section 411(4)(b) of the Corporations Act approving this Scheme comes into effect pursuant to section 411(10) of the Corporations Act on or before the End Date.

3.2 Conditions precedent and operation of clause 4

The satisfaction of each condition of clause 3.1 of this Scheme is a condition precedent to the operation of clauses 4.2 and 5 of this Scheme.

3.3 Joint Certificates

(a) QMS and Bidder will provide a joint certificate to the Court at the Second Court Hearing confirming whether or not the conditions precedent in clauses 3.1(a) and 3.1(b) above have been satisfied or waived as at the Delivery Time.

(b) The joint certificate given by QMS and Bidder constitutes conclusive evidence that the conditions precedent in clauses 3.1(a) and 3.1(b) above have been satisfied or waived as at the Delivery Time.

3.4 Termination and End Date

Without limiting any rights under the Scheme Implementation Deed, if:

(a) the Scheme Implementation Deed or the Deed Poll is terminated in accordance with its terms before the Scheme becomes Effective; or

(b) the Effective Date has not occurred on or before the End Date,

then the Scheme will lapse and each of Bidder and QMS are released from any further obligation to take steps to implement the Scheme.

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4 Implementation of this Scheme

4.1 Lodgement of Court orders with ASIC

If the conditions precedent set out in clause 3.1 of this Scheme (other than the condition precedent in clause 3.1(e)) are satisfied, QMS must lodge with ASIC in accordance with section 411(10) of the Corporations Act an office copy of the order made by the Court under section 411(4)(b) of the Corporations Act approving this Scheme before 5:00pm on the Business Day following the day on which such office copy is received by QMS or such later date as QMS and Bidder agree in writing.

4.2 Transfer of Scheme Shares

Subject to the Scheme becoming Effective, the following will occur on the Implementation Date in the order set out below:

(a) Bidder confirming in writing to QMS that:

(i) the Cash Consideration has been provided in accordance with clause 5.4(a); and

(ii) the Scrip Consideration has been provided in accordance with clause 5.5;

(b) payment by QMS of the Cash Consideration in the manner contemplated by clause 5.4(b); and

(c) subject to the matters in clauses 4.2(a) and 4.2(b) of this clause being satisfied, , all of the Scheme Shares, together with all rights and entitlements attaching to the Scheme Shares as at the Implementation Date, must be transferred to Bidder without the need for any further act by any Scheme Shareholder (other than acts performed by QMS as attorney and agent for Scheme Shareholders under clause 8 of this Scheme) by:

(i) QMS delivering to Bidder a duly completed and executed Scheme Transfer, executed on behalf of the Scheme Shareholders by QMS as their attorney and agent; and

(ii) Bidder duly executing the Scheme Transfer and delivering the executed and, if necessary, stamped Scheme Transfer to QMS for registration; and

(iii) immediately following receipt of the duly executed Scheme Transfer in accordance with clause 4.2(c)(ii), QMS entering, or procuring the entry of, the name of Bidder in the QMS Share Register in respect of all of the Scheme Shares transferred to Bidder in accordance with this Scheme.

5 Scheme Consideration

5.1 Entitlement to Scheme Consideration

Subject to the terms of this Scheme, on the Implementation Date, in consideration for the transfer to Bidder of the Scheme Shares, each Scheme Shareholder will be entitled to receive the Scheme Consideration in respect of each of their Scheme Shares in accordance with clauses 5.2 to 5.5 and the Deed Poll.

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5.2 Election procedure

(a) QMS must provide or procure the provision of an Election Form to each Relevant Shareholder, with the Scheme Booklet that is sent to them.

(b) Subject to clauses 5.2(c), 5.2(d) and 5.2(e), each of the Relevant Shareholders will be entitled to make an Election. All Elections will take effect in accordance with this Scheme (provided that any Relevant Shareholder who makes an Election also qualifies as a Scheme Shareholder).

(c) For an Election to be valid:

(i) the Relevant Shareholder must complete and sign the Election Form in accordance with the terms and conditions of the Election Form, the instructions in the Scheme Booklet and this clause 5.2; and

(ii) the Election Form must be received by the Share Registry at the address specified on the Election Form before the Election Time,

unless Bidder and QMS agree otherwise, in their absolute discretion.

(d) If a Relevant Shareholder makes an Election, that Election will apply in respect of that number (as specified in the Election Form) of the Relevant Shareholder’s entire registered holding of QMS Shares at the Scheme Record Date, regardless of whether the Relevant Shareholder’s holding at the Scheme Record Date is greater or less than the Relevant Shareholder’s holding at the time it made its Election, unless Bidder and QMS agree otherwise, in their absolute discretion.

(e) A Relevant Shareholder who makes a valid Election may vary, withdraw or revoke that Election by lodging a replacement Election Form so that it is received by the Share Registry at the address specified on the Election From before the Election Time. After the Election Time, a valid Election made by a Relevant Shareholder will be irrevocable unless Bidder and QMS agree, in their absolute discretion, to the revocation of the Election.

(f) The Election Form must include the relevant matters set out in the Scheme and must otherwise be in a form agreed by Bidder and QMS in writing.

5.3 Determination of Scheme Consideration

(a) If a Scheme Shareholder:

(i) is not a Relevant Shareholder; or

(ii) is a Relevant Shareholder who has not made a valid Election before the Election Time,

then the Scheme Consideration applicable for that Scheme Shareholder is the Cash Consideration for each Scheme Share held by the Scheme Shareholder.

(b) If the Scheme Shareholder is a Relevant Shareholder who has made a valid Election before the Election Time, then the Scheme Consideration applicable for that Scheme Shareholder for each Scheme Share held by the Scheme Shareholder is:

(i) 0.915 ordinary shares and 0.305 preference shares in HoldCo per Scheme Share in respect of the number of Scheme Shares held by the Relevant

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Shareholder for which the Relevant Shareholder has elected (in the Election Form) to receive the Scrip Consideration; plus

(ii) an amount in Australia dollars equal to A$1.22 per Scheme Share in respect of the number of Scheme Shares held by the Relevant Shareholder for which the Relevant Shareholder has elected (in the Election Form) to receive the Cash Consideration.

5.4 Provision of Cash Consideration

(a) The obligation of Bidder to provide the Cash Consideration under this Scheme and the Deed Poll will be satisfied by Bidder, no later than the Business Day before the Implementation Date, depositing (or procuring the deposit), in Immediately Available Funds, the aggregate amount of the Cash Consideration payable to all Scheme Shareholders into the Trust Account (except that the amount of any interest on the amount deposited, less bank fees and other charges, will be credited to Bidder’s account), such amount to be held by QMS on trust for the purpose of paying the Cash Consideration to Scheme Shareholders who are entitled to receive it pursuant to clause 5.4(b).

(b) On the Implementation Date, and subject to receipt of the Cash Consideration from Bidder in accordance with clause 5.4(a), QMS must pay (or procure payment) from the Trust Account to each Scheme Shareholder an amount equal to the applicable amount of Cash Consideration that the Scheme Shareholder is entitled to pursuant to clause 5.3 for each Scheme Share held by that Scheme Shareholder.

(c) QMS’s obligation under clause 5.4(b) will be satisfied by QMS:

(i) where a Scheme Shareholder has, before the Scheme Record Date, made an election in accordance with the requirements of the Share Registry to receive dividend payments from QMS by electronic funds transfer to a bank account nominated by the Scheme Shareholder, paying, or procuring the payment of, the relevant amount in Australian currency by electronic means in accordance with that election; or

(ii) whether or not a Scheme Shareholder has made an election referred to in clause 5.4(c)(i), dispatching, or procuring the dispatch of, a cheque in Australian currency for the relevant amount to the Scheme Shareholder by prepaid post to their Registered Address, such cheque being drawn in the name of the Scheme Shareholder (or in the case of joint holders, in accordance with clause 5.6).

(d) In the event that:

(i) a Scheme Shareholder does not have a Registered Address and no account has been notified in accordance with clause 5.4(c)(i) or a deposit into such an account is rejected or refunded; or

(ii) a cheque issued under this clause 5 has been cancelled in accordance with clause 5.7(a),

QMS as the trustee for the Scheme Shareholders may credit the amount payable to the relevant Scheme Shareholder to a separate bank account of QMS (Separate Account) to be held until the Scheme Shareholder claims the amount or the amount is dealt with in accordance with the Unclaimed Money Act. To avoid doubt, if the amount is not credited to a Separate Account, the amount will continue to be

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held in the Trust Account until the Scheme Shareholder claims the amount or the amount is dealt with in accordance with the Unclaimed Money Act.

(e) Until such time as an amount referred to in clause 5.4(d) is dealt with in accordance with the Unclaimed Money Act, QMS must hold the amount on trust for the relevant Scheme Shareholder, but any interest or other benefit accruing from the amount will be to the benefit of Bidder. An amount credited to the Separate Account or Trust Account (as applicable) is to be treated as having been paid to the Scheme Shareholder when credited to the Separate Account or Trust Account (as applicable). QMS must maintain records of the amounts paid, the people who are entitled to the amounts and any transfers of the amounts.

(f) To the extent that there is a surplus in the amount held by QMS as the trustee for the Scheme Shareholders in the Trust Account after the process in clauses 5.4(d) and 5.4(e) has completed, that surplus may be paid by QMS as the trustee for the Scheme Shareholders to Bidder following the satisfaction of QMS’s obligations as the trustee for the Scheme Shareholders under this clause 5.4.

5.5 Provision of Scrip Consideration

(a) HoldCo must, before no later than 12:00 noon (or such later time as Bidder and QMS may agree in writing) on the Implementation Date, procure that the name of each Scheme Shareholder entitled to be issued HoldCo Securities under this Scheme is entered in HoldCo’s register of members as the holder of those HoldCo Securities (and in relation to HoldCo Securities issued to a Scheme Shareholder, having the same holding name and address and other details as the holding of the relevant QMS Shares). A Scheme Shareholder entitled to be issued HoldCo Securities under this Scheme may, in the Election Form, direct that the HoldCo Securities to which they are entitled be issued to a related body corporate (as defined in the Corporations Act) of the Scheme Shareholder (in which case such related body corporate’s name and details will be entered into HoldCo’s register of members).

(b) On the Implementation Date, HoldCo must send or procure the sending of a certificate to each Scheme Shareholder to whom HoldCo Securities are issued under this Scheme, reflecting the issue of such HoldCo Securities.

5.6 Joint holders

In the case of Scheme Shares held in joint names:

(a) any cheque required to be sent under this Scheme will be made payable to the joint holders and sent to the holder whose name appears first in the QMS Share Register as at the Scheme Record Date; and

(b) any other document required to be sent under this Scheme will be forwarded to the holder whose name appears first in the QMS Share Register as at the Scheme Record Date.

5.7 Cancellation and re-issue of cheques

(a) QMS may cancel a cheque issued under this clause 5 if the cheque:

(i) is returned to QMS; or

(ii) has not been presented for payment within six months after the date on which the cheque was sent.

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(b) During the period of one year commencing on the Implementation Date, on request in writing from a Scheme Shareholder to QMS (or the Share Registry) (which request may not be made until the date which is 5 Business Days after the Implementation Date), a cheque that was previously cancelled under clause 5.7(a) must be reissued.

5.8 HoldCo Securities

Each of Bidder and HoldCo undertake in favour of QMS (in its own right and on behalf of each Relevant Shareholder) that:

(a) the HoldCo Securities issued as Scrip Consideration will, on their issue, rank equally in all respects with all other HoldCo Securities in the same class; and

(b) on issue, each HoldCo Security will be fully paid, duly and validly issued in accordance with all applicable laws and, to the extent within the control of Bidder and HoldCo, free from any Encumbrance.

5.9 Unclaimed monies

(a) The Unclaimed Money Act will apply in relation to any Scheme Consideration which becomes 'unclaimed money' (as defined in section 3 of the Unclaimed Money Act).

(b) Any interest or other benefit accruing from unclaimed Scheme Consideration will be to the benefit of Bidder.

5.10 Orders of a court

If written notice is given to QMS (or the Share Registry) of an order or direction made by a court of competent jurisdiction or by another Government Agency that:

(a) requires payment to a third party of a sum in respect of Scheme Shares held by a particular Scheme Shareholder, which sum would otherwise be payable to that Scheme Shareholder by QMS in accordance with this clause 5, then QMS will be entitled to make that payment (or procure that it is made) in accordance with that order or direction; or

(b) prevents QMS from making a payment to a particular Scheme Shareholder in accordance with clause 5.4(a), or such payment is otherwise prohibited by applicable law, QMS will be entitled to retain an amount, in Australian dollars, equal to the amount of the relevant payment until such time as payment in accordance with this clause 5.10(b) is permitted by that order or otherwise by law.

5.11 Fractional entitlements and share splitting or division

(a) If the number of Scheme Shares held by a Scheme Shareholder at the Scheme Record Date is such that the aggregate entitlement of the Scheme Shareholder to Scheme Consideration:

(i) comprising the HoldCo Securities is such that a fractional entitlement to a HoldCo Share arises; or

(ii) comprising cash is such that a fractional entitlement to a cent arises,

then the fractional entitlement will be rounded:

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(iii) in the case of HoldCo Securities, down to the nearest whole number of HoldCo Securities; and

(iv) in the case of cash, up to the nearest cent.

(b) If Bidder is of the opinion (acting reasonably) that two or more Scheme Shareholders (each of whom holds a number of Scheme Shares which results in rounding in accordance with clause 5.11(a)) have, before the Scheme Record Date for the Scheme, been party to shareholding splitting or division in an attempt to obtain unfair advantage by reference to such rounding, then:

(i) Bidder may give notice of that opinion and relevant details to QMS; and

(ii) within 2 Business Days of receipt of such notice, QMS must give notice to those Scheme Shareholders:

(A) setting out their names and registered addresses as shown in the QMS Share Register;

(B) stating that opinion;

(C) attributing to one of them specifically identified in the notice of the Scheme Shares held by all of them; and

(D) attributing to one of them specifically identified in the notice which Election made by or on behalf of them applies to all of them,

and, after such notice has been given, the Scheme Shareholder specifically identified in the notice as the deemed holder of all the specified Scheme Shares will, for the purposes of the provisions of the Scheme, be taken to hold all of those Scheme Shares and each of the other Scheme Shareholders whose names and registered addresses are set out in the notice will, for the purposes of the provisions of the Scheme, be taken to hold no Scheme Shares. Bidder and HoldCo, in complying with the provisions of the Scheme relating to them in respect of the Scheme Shareholder specifically identified in the notice as the deemed holder of all the specified Scheme Shares, will be taken to have satisfied and discharged their obligations to the other Scheme Shareholders named in the notice under the terms of the Scheme.

6 Dealings in QMS Shares

6.1 Determination of Scheme Shareholders

To establish the identity of the Scheme Shareholders, dealings in QMS Shares or other alterations to the QMS Share Register will only be recognised if:

(a) in the case of dealings of the type to be effected using CHESS, the transferee is registered in the QMS Share Register as the holder of the relevant QMS Shares at or before the Scheme Record Date; and

(b) in all other cases, registrable transfer or transmission applications in respect of those dealings, or valid requests in respect of other alterations, are received at or before the Scheme Record Date at the place where the QMS Share Register is kept,

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and QMS must not accept for registration, nor recognise for any purpose (except a transfer to Bidder pursuant to this Scheme and any subsequent transfer by Bidder or its successors in title), any transfer or transmission application or other request received on or after the Scheme Record Date, or received prior to the Scheme Record Date but not in registrable or actionable form.

6.2 QMS Share Register

(a) QMS must register registrable transmission applications or transfers of QMS Shares in accordance with clause 6.1(b) at or before the Scheme Record Date or as soon as reasonably practicable after receipt, provided that nothing in this clause 6.2(a) requires QMS to register a transfer that would result in a QMS Shareholder holding a parcel of QMS Shares that is less than a ‘marketable parcel’ (as defined in the operating rules of ASX).

(b) If this Scheme becomes Effective, a Scheme Shareholder (and any person claiming through that holder) must not dispose of, or purport or agree to dispose of, any Scheme Shares or any interest in them after the Scheme Record Date otherwise than pursuant to this Scheme, and any attempt to do so will have no effect and QMS will be entitled to disregard any such disposal, purported disposal or agreement.

(c) For the purpose of determining entitlements to the Scheme Consideration, QMS must maintain the QMS Share Register in accordance with the provisions of this clause 6.2 until the Scheme Consideration has been provided to the Scheme Shareholders in accordance with clauses 5.4(b) and (c) and clause 5.5. The QMS Share Register in this form will solely determine entitlements to the Scheme Consideration.

(d) All statements of holding for QMS Shares (other than statements of holding in favour of Bidder) will cease to have effect after the Scheme Record Date as documents of title in respect of those shares and, as from that date, each entry current at that date on the QMS Share Register (other than entries in respect of Bidder) will cease to have effect except as evidence of entitlement to the Scheme Consideration in respect of the QMS Shares relating to that entry.

(e) As soon as possible after the Scheme Record Date, and in any event within one Business Day after the Scheme Record Date, QMS will ensure that details of the names, Registered Addresses and holdings of QMS Shares for each Scheme Shareholder as shown in the QMS Share Register as at the Scheme Record Date are available to Bidder in the form Bidder reasonably requires.

7 Quotation of QMS Shares

(a) QMS will apply to ASX to suspend trading in QMS Shares with effect from the close of trading on the Effective Date.

(b) QMS will apply:

(i) for termination of the official quotation of QMS Shares on the ASX; and

(ii) to have itself removed from the official list of ASX,

in each case with effect on and from the close of trading on the trading day immediately following, or shortly after, the Implementation Date.

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(c) QMS must use its best endeavours to ensure that such termination of official quotation and removal from the official list of ASX does not occur before the Implementation Date.

8 General Scheme provisions

8.1 Consent to amendments to this Scheme

If the Court proposes to approve this Scheme subject to any alterations or conditions:

(a) QMS may by its counsel consent on behalf of all persons concerned to those alterations or conditions to which Bidder has consented; and

(b) each Scheme Shareholder agrees to any such alterations or conditions which counsel for QMS has consented to.

8.2 Scheme Shareholders’ agreements and warranties

(a) Each Scheme Shareholder:

(i) agrees to the transfer of their Scheme Shares to Bidder together with all rights and entitlements attaching to those shares in accordance with this Scheme;

(ii) agrees to the variation, cancellation or modification of the rights attached to their Scheme Shares constituted by or resulting from this Scheme;

(iii) agrees:

(A) that after the transfer of the Scheme Shares to Bidder, any share certificate relating to the Scheme Shares will not constitute evidence of title to those Scheme Shares; and

(B) at the direction of Bidder, to destroy any share certificates relating to the Scheme Shares; and

(iv) acknowledges that this Scheme binds QMS and all Scheme Shareholders (including those who did not attend the Scheme Meeting and those who did not vote, or voted against this Scheme, at the Scheme Meeting).

(b) Each Relevant Shareholder who is issued HoldCo Securities under this Scheme agrees to become a shareholder of HoldCo in respect of those HoldCo Securities and to be bound by the Holdco constitution and the Holdco shareholders agreement entered into by HoldCo and the shareholders of HoldCo each being substantially in the form provided to each Relevant Shareholder with the Election Form or such later time as agreed by the Relevant Shareholders.

(c) Each Scheme Shareholder is taken to have warranted to Bidder, and appointed and authorised QMS as its attorney and agent to warrant to Bidder, that:

(i) all their Scheme Shares (including any rights and entitlements attaching to their Scheme Shares) which are transferred under this Scheme will, at the time of transfer of them to Bidder, be fully paid and free from all:

(A) mortgages, charges, liens, encumbrances, pledges, security interests (including any 'security interests' within the meaning of section 12 of

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the Personal Properties Securities Act 2009 (Cth)) and interests of third parties of any kind, whether legal or otherwise; and

(B) restrictions on transfer of any kind; and

(ii) they have full power and capacity to transfer their Scheme Shares to Bidder together with any rights attaching to those Scheme Shares; and

(iii) except as otherwise provided for or contemplated in the Scheme Implementation Deed, they have no existing right to be issued any QMS Shares, or any other QMS securities.

(d) QMS undertakes that it will provide the warranties in clause 8.2(b) to Bidder as agent and attorney for each Scheme Participant.

8.3 Title to and rights in Scheme Shares

(a) To the extent permitted by law, the Scheme Shares (including all rights and entitlements attaching to the Scheme Shares) transferred under this Scheme will, at the time of transfer of them to Bidder, vest in Bidder free from all:

(i) mortgages, charges, liens, encumbrances, pledges, security interests (including any 'security interests' within the meaning of section 12 of the Personal Properties Securities Act 2009 (Cth)) and interests of third parties of any kind, whether legal or otherwise; and

(ii) restrictions on transfer of any kind.

(b) Upon the provision of the Scheme Consideration to each Scheme Shareholder in accordance with clauses 5.4(b) and (c) and clause 5.5, Bidder will be beneficially entitled to the Scheme Shares to be transferred to it under this Scheme pending registration by QMS of Bidder in the QMS Share Register as the holder of the Scheme Shares. Bidder's entitlement to be registered in the QMS Share Register as the holder of the Scheme Shares arises on the Implementation Date in accordance with clause 4.2.

8.4 Appointment of sole proxy

Upon the provision of the Scheme Consideration to each Scheme Shareholder in accordance with clauses 5.4(b) and (c) and clause 5.5 and until QMS registers Bidder as the holder of all Scheme Shares in the QMS Share Register:

(a) each Scheme Shareholder is deemed to have irrevocably appointed Bidder as attorney and agent (and directed Bidder in each such capacity) to appoint any director, officer, secretary or agent nominated by Bidder as its sole proxy and, where applicable or appropriate, corporate representative to attend shareholders' meetings, exercise the votes attaching to the Scheme Shares registered in their name and sign any shareholders' resolution whether in person, by proxy or by corporate representative;

(b) no Scheme Shareholder may itself attend or vote at any shareholders’ meetings or sign any shareholders’ resolutions, whether in person, by proxy or by corporate representative (other than pursuant to clause 8.4(a));

(c) each Scheme Shareholder must take all other actions in the capacity of a registered holder of Scheme Shares as Bidder reasonably directs; and

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(d) each Scheme Shareholder acknowledges and agrees that in exercising the powers conferred by clause 8.4(a), Bidder and any director, officer, secretary or agent nominated by Bidder under that clause may act in the best interests of Bidder as the intended registered holder of the Scheme Shares.

8.5 Authority given to QMS

On the Effective Date, each Scheme Shareholder, without the need for any further act, irrevocably appoints QMS and each of its directors, officers and secretaries (jointly and each of them severally) as its attorney and agent for the purpose of:

(a) enforcing the Deed Poll against Bidder and HoldCo; and

(b) executing any document, or doing or taking any other act, necessary, desirable or expedient to give full effect to this Scheme and the transactions contemplated by it, including executing and delivering the Scheme Transfer,

and QMS accepts such appointment. QMS, as attorney and agent of each Scheme Shareholder, may sub-delegate its functions, authorities or powers under this clause 8.5 to all or any of its directors, officers or employees (jointly, severally or jointly and severally).

8.6 Binding effect of this Scheme

This Scheme binds QMS and all of the Scheme Shareholders (including those who did not attend the Scheme Meetings and those who did not vote, or voted against this Scheme, at the Scheme Meetings) and, to the extent of any inconsistency, overrides the constitution of QMS.

9 General

9.1 Stamp duty

Bidder and HoldCo will:

(a) pay all stamp duty (if any) and any related fines and penalties payable on or in respect of the transfer by the Scheme Shareholders of the Scheme Shares to Bidder pursuant to this Scheme or the Deed Poll; and

(b) indemnify each Scheme Shareholder against any liability incurred by the Scheme Shareholder arising from failure to comply with clause 9.1(a).

9.2 Consent

Each Scheme Shareholder consents to QMS and Bidder doing all things necessary or incidental to give full effect to the implementation of this Scheme and the transactions contemplated by it.

9.3 Enforcement of Deed Poll

QMS undertakes in favour of each Scheme Shareholder to enforce the Deed Poll against Bidder and HoldCo on behalf of and as agent and attorney for the Scheme Shareholder. F

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9.4 Notices

(a) If a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to QMS, it will not be taken to be received in the ordinary course of post or on a date and time other than the date and time (if any) on which it is actually received at QMS’s registered office or at the office of the Share Registry.

(b) The accidental omission to give notice of the Scheme Meetings or the non-receipt of such notice by a QMS Shareholder will not, unless so ordered by the Court, invalidate the Scheme Meetings or the proceedings of the Scheme Meetings.

9.5 Governing law and jurisdiction

(a) This Scheme is governed by the laws in force in Victoria.

(b) The parties irrevocably submit to the non-exclusive jurisdiction of courts exercising jurisdiction in Victoria and courts competent to determine appeals from those courts in respect of any proceedings arising out of or in connection with this Scheme. The parties irrevocably waive any objection to the venue of any legal process in these courts on the basis that the process has been brought in an inconvenient forum.

9.6 Further action

QMS must do all things and execute all documents necessary to give full effect to this Scheme and the transactions contemplated by it.

9.7 No liability when acting in good faith

None of QMS, Bidder, or any of their respective Representatives, will be liable for anything done or omitted to be done in the performance of this Scheme or the Deed Poll in good faith.

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Gilbert + Tobin Schedule 1 – Dictionary | page | 14

Schedule 1 — Dictionary

1 Dictionary

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited (ABN 98 008 624 691) or, if the context requires, the financial market operated by it.

Bidder means Shelley Bidco Pty Ltd (ACN 634 292 881).

Business Day means a day that is not a Saturday, Sunday or a public holiday or bank holiday in Melbourne, Victoria.

Cash Consideration means A$1.22 per Scheme Share.

CHESS means the Clearing House Electronic Subregister System operated by ASX Settlement Pty Limited and ASX Clear Pty Limited.

Corporations Act means the Corporations Act 2001 (Cth).

Court means the Federal Court of Australia (Victorian registry) or any other court of competent jurisdiction under the Corporations Act as QMS and Bidder may agree in writing.

Deed Poll means the deed poll dated 10 December 2019 under which Bidder and Holdco covenant in favour of Scheme Shareholders to provide the Scheme Consideration in accordance with the terms of this Scheme.

Delivery Time means, in relation to the Second Court Date, 2 hours before the commencement of the hearing or if the commencement of the hearing is adjourned, the commencement of the adjourned hearing, of the court to approve the Scheme in accordance with section 411(4)(b) of the Corporations Act.

Effective means, when used in relation to the Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to this Scheme.

Effective Date, with respect to this Scheme, means the date on which this Scheme becomes Effective.

Election means an election by a Relevant Shareholder to receive some or all of their Scheme Consideration in the form of Scrip Consideration and the remainder in the form of Cash Consideration, made in accordance with clause 5.2.

Election Form means a form issued by or on behalf of QMS for the purposes of a Relevant Shareholder making an Election in a form agreed to by QMS and Bidder.

Election Time means 5.00pm on the third Business Day before the date of the Scheme Meetings, or such other date as is agreed in writing between Bidder and QMS.

End Date means the later of:

(a) 30 April 2020; and

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(b) such other date and time agreed in writing between Bidder and QMS.

First Court Date means the date the Court first heard the application to order the convening of the Scheme Meetings under section 411(1) of the Corporations Act.

Government Agency means any government or representative of a government or any governmental, non-governmental, administrative, fiscal, regulatory or judicial body, department, commission, authority, tribunal, agency, competition authority or entity and includes any minister, ASIC, ASX, the Takeovers Panel and any regulatory organisation established under statute or any stock exchange.

HoldCo means Shelley Topco Pty Ltd (ACN 634 291 375), the ultimate holding company of Bidder.

HoldCo Securities means securities (including ordinary shares and preference shares) in the capital of HoldCo and HoldCo Security means any one of them.

Immediately Available Funds means a bank cheque or other form of cleared funds acceptable to QMS (acting reasonably).

Implementation Date means, with respect to the Scheme, the fifth Business Day, or such other Business Day as Bidder and QMS agree, following the Scheme Record Date for the Scheme.

Listing Rules means the official listing rules of ASX as amended from time to time.

QMS Share means a fully paid ordinary share in the capital of QMS.

QMS Share Register means the register of members of QMS maintained by or on behalf of QMS in accordance with section 168(1) of the Corporations Act.

QMS Shareholder means each person who is registered in the QMS Share Register as a holder of QMS Shares.

Registered Address means, in relation to a QMS Shareholder, the address shown in the QMS Share Register as at the Scheme Record Date.

Relevant Shareholders means:

(a) Barctin Superannuation Pty Ltd as trustee of Barctin Superannuation Fund;

(b) Wenvale Pty Ltd as trustee for the Barclay Nettlefold Family Trust; and

(c) John O’Neill Pty Ltd (as trustee for the O’Neill Pastoral Discretionary Trust),

and Relevant Shareholder means any one of them.

Scheme means this scheme of arrangement subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by Bidder and QMS in writing.

Scheme Booklet means the explanatory booklet prepared by QMS in respect of the Transaction in accordance with the terms of the Scheme Implementation Deed and despatched to QMS Shareholders.

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Scheme Implementation Deed means the scheme implementation deed dated 29 October 2019 between Bidder and QMS relating to (among other things) the implementation of this Scheme.

Scheme Consideration means the Cash Consideration and/or Scrip Consideration payable per Scheme Share held by a Scheme Shareholder determined in accordance with clause 5.3.

Scheme Meetings means the meetings of QMS Shareholders ordered by the Court to be convened under section 411(1) of the Corporations Act to consider and vote on the Scheme and includes any meeting convened following any adjournment or postponement of that meeting.

Scheme Record Date means, in respect of the Scheme, 5.00pm on the third Business Day (or such other Business Day as Bidder and QMS agree in writing) following the Effective Date.

Scheme Share means a QMS Share on issue as at the Scheme Record Date.

Scheme Shareholder means a person who holds one or more Scheme Shares.

Scheme Transfer means one or more proper instruments of transfer in respect of the Scheme Shares for the purposes of section 1071B of the Corporations Act, which may be or include a master transfer of all or part of the Scheme Shares.

Scrip Consideration means the Scheme Consideration to be provided to Scheme Shareholders in the form of the issue of HoldCo Securities under clause 5.3(b)(i) of this Scheme.

Second Court Date means the first day on which an application made to the Court for an order under section 411(4)(b) of the Corporations Act approving this Scheme was heard or scheduled to be heard, or, if the application was adjourned or subject to appeal for any reason, the day on which the adjourned application was heard.

Second Court Hearing means the hearing of the application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving the Scheme..

Share Registry means Computershare Investor Services Pty Ltd (ACN 078 279 277).

Trust Account means an Australian dollar denominated trust account which attracts interest at a commercial rate and is operated by QMS as trustee for the Scheme Shareholders, details of which QMS must notify to Bidder no later than 5 Business Days before the Implementation Date.

Unclaimed Money Act means the Unclaimed Money Act 2008 (Vic).

2 Interpretation

In this Scheme, the following rules of interpretation apply unless the contrary intention appears.

(a) Headings are for convenience only and do not affect the interpretation of this Scheme.

(b) The singular includes the plural and vice versa.

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(c) Words that are gender neutral or gender specific include each gender.

(d) Where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase have corresponding meanings.

(e) The words “include”, “including” and similar expressions are not words of limitation and do not limit what else might be included.

(f) A reference to:

(i) a person includes a natural person, estate of a natural person, partnership, joint venture, government agency, association, corporation or other body corporate or entity (as that term is defined in section 64A of the Corporations Act);

(ii) a thing (including a chose in action or other right) includes a part of that thing;

(iii) a party includes its successors and permitted assigns;

(iv) a document includes all amendments or supplements to that document;

(v) a clause, term, party, schedule or attachment is a reference to a clause or term of, or a party, schedule or attachment to, this Scheme (as applicable);

(vi) this Scheme includes all schedules to it;

(vii) a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by-law, judgment, rule of common law or equity or a Listing Rule and is a reference to that law as amended, consolidated or replaced;

(viii) an agreement (other than this Scheme) includes an undertaking or legally enforceable arrangement or understanding (whether or not in writing);

(ix) a time period includes the date referred to as that on which the period begins and the date referred to as that on which the period ends;

(x) a monetary amount is in Australian dollars; and

(xi) time is to Melbourne, Australia time.

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ANNEXURE C – DEED POLLQMS MEDIA LIMITED | SCHEME BOOKLET204

ANNEXURE CDEED POLL

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ANNEXURE C – DEED POLL QMS MEDIA LIMITED | SCHEME BOOKLET 205F

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ANNEXURE C – DEED POLLQMS MEDIA LIMITED | SCHEME BOOKLET206F

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ANNEXURE C – DEED POLL QMS MEDIA LIMITED | SCHEME BOOKLET 207

10 December

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ANNEXURE DNOTICE OF GENERAL SCHEME MEETING

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NOTICE OF GENERAL SCHEME MEETINGNotice is hereby given that, by an order of the Court made on Thursday, 12 December 2019 pursuant to section 411(1) of the Corporations Act, a meeting of General Shareholders (other than Rollover Shareholders) will be held at 10.00am (Melbourne time) on Thursday, 6 February 2020 at The RACV Club, 501 Bourke St, Melbourne VIC 3000, (this is the General Scheme Meeting).

Purpose of the General Scheme MeetingThe purpose of the General Scheme Meeting is to consider and, if thought fit, to agree to a scheme of arrangement (with or without any modifications, alterations or conditions agreed in writing between QMS and BidCo and approved by the Court or any modifications, alterations or conditions as are thought just by the Court to which QMS and BidCo agree in writing) to be made between QMS and QMS Shareholders and to consider and, if thought fit, to pass the General Scheme Resolution.

To enable you to make an informed voting decision, further information about the Scheme is set out in the accompanying explanatory statement (for the purposes of section 412(1) of the Corporations Act) which, together with this Notice of General Scheme Meeting, forms part of this Scheme Booklet.

Capitalised terms used in this Notice of General Scheme Meeting but not defined in it have the same meaning as set out in the Glossary in Section 11 of the Scheme Booklet.

Business of the General Scheme Meeting – General Scheme ResolutionTo consider and, if thought fit, to pass the following General Scheme Resolution in accordance with section 411(4)(a)(ii) of the Corporations Act:

“That pursuant to and in accordance with section 411 of the Corporations Act 2001 (Cth):

a. the Scheme, the terms of which are contained in and more particularly described in the Scheme Booklet (of which this Notice of General Scheme Meeting forms part) is agreed to (with or without any modifications, alterations or conditions agreed in writing between QMS and BidCo and approved by the Court or any modifications, alterations or conditions as thought just by the Court to which QMS and BidCo agree in writing); and

b. the directors of QMS are authorised, subject to the terms of the Scheme Implementation Deed:

i. to agree to any modifications, alterations or conditions with BidCo;

ii. to agree to any modifications, alterations or conditions as are thought just by the Court; and

iii. subject to approval of the Scheme by the Court, to implement the Scheme with any such modifications, alterations or conditions.”

ChairmanThe Court has directed that Wayne Stevenson is to act as Chairman of the General Scheme Meeting (and that, if Wayne Stevenson is unable or unwilling to attend, Robert Alexander is to act as Chairman of the General Scheme Meeting) and has directed the Chairman to report the result of the General Scheme Resolution to the Court.

Dated 13 December 2019

By Order of the QMS Board

Malcolm Pearce Company Secretary

ANNEXURE D – NOTICE OF GENERAL SCHEME MEETING

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EXPLANATORY NOTES FOR THE GENERAL SCHEME MEETINGGeneralThis Notice of General Scheme Meeting relates to the Scheme and should be read in conjunction with the balance of the Scheme Booklet. The Scheme Booklet contains important information to assist you in determining how to vote on the General Scheme Resolution, including the information prescribed by the Corporations Act and the Corporations Regulations.

A copy of the Scheme is set out in Annexure B.

Requisite MajoritiesThe Scheme can only proceed if, at the General Scheme Meeting, the General Scheme Resolution is passed. For this to occur, the General Scheme Resolution must be passed by:

� unless the Court orders otherwise, a majority in number of General Shareholders who are present at the General Scheme Meeting and vote on the General Scheme Resolution, either in person or by proxy, attorney or representative; and

� at least 75% of the votes cast at the General Scheme Meeting by General Shareholders on the General Scheme Resolution, either in person or by proxy, attorney or representative.

Court approvalIf the General Scheme Resolution (set out in this Notice of General Scheme Meeting) and the Rollover Shareholders Scheme Resolution (set out in the Notice of Rollover Shareholders Scheme Meeting) are approved at the relevant Scheme Meetings by the Requisite Majorities, the implementation of the Scheme will be subject, among other things, to the subsequent approval of the Court. If both of these Scheme Resolutions are passed by the Requisite Majorities at the Relevant Scheme Meetings, and the other conditions precedent to the Scheme (other than approval by the Court and lodgement of the Court orders approving the Scheme with ASIC) are satisfied or (if permitted) waived by the time required under the Scheme, QMS intends to apply to the Court for the necessary orders to give effect to the Scheme.

In order for the Scheme to become Effective, it must be approved by the Court at the Second Court Hearing and an office copy of the orders of the Court approving the Scheme must be lodged with ASIC. The Second Court Hearing is currently proposed to take place on Monday, 10 February 2020.

Entitlement to voteEach General Shareholder who is registered (as a holder of QMS Shares) on the QMS Share Register at 5.00pm (Melbourne time) on Tuesday, 4 February 2020 is entitled to attend and vote at the General Scheme Meeting and will have one vote for each QMS Share they hold.

Voting at the General Scheme MeetingGeneral Shareholders may vote on the General Scheme Resolution by:

� attending the General Scheme Meeting in person; or

� proxy, attorney or, in the case of a body corporate which is a General Shareholder, corporate representative appointed in accordance with the Corporations Act.

Details in respect of each of these methods is set out below.

Voting in personTo vote in person, you must attend the General Scheme Meeting. If you attend, you will be admitted to the meeting and given a voting card at the point of entry to the meeting upon disclosing your name and address. Please bring a form of personal identification with you, such as your driver’s licence.


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Voting by proxyTo vote by proxy, you must complete and return the personalised proxy form enclosed with this Scheme Booklet or lodge your proxy online by no later than 48 hours before the General Scheme Meeting, in accordance with the instructions on the form. If your proxy is signed by an attorney, please also enclose the authority under which the proxy is signed (or a certified copy of the authority). A proxy need not be a General Shareholder or a QMS Shareholder.

You may appoint an individual or body corporate as your proxy. If you appoint a body corporate as your proxy, that body corporate must ensure that it appoints a corporate representative to exercise its powers as proxy at the General Scheme Meeting (see below).

A General Shareholder entitled to cast two or more votes at the General Scheme Meeting may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but, where the proportion or number is not specified, each proxy may exercise half of the votes.

The appointment may specify the proportion or number of votes that the proxy may exercise.

You can direct your proxy how to vote by following the instructions on the proxy form. If you do not direct your proxy how to vote, the proxy may vote, or abstain from voting, as he or she thinks fit. If you instruct your proxy to abstain from voting on an item of business, he or she is directed not to vote on your behalf, and the QMS Shares the subject of the proxy appointment will not be counted in computing the Requisite Majority.

If you return your proxy form:

� without identifying a proxy on it, you will be taken to have appointed the Chairman of the meeting as your proxy to vote on your behalf; or

� with a proxy identified on it but your proxy does not attend the meeting, the Chairman of the meeting will act in place of your nominated proxy and vote in accordance with any directions on your proxy form.

The Chairman of the meeting intends to vote all available proxies which appoint (or are taken to appoint) the Chairman in favour of the Scheme Resolution (in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interest of QMS Shareholders).

A vote cast in accordance with the appointment of a proxy is valid even if before the vote was cast the appointor:

� dies;

� becomes mentally incapacitated;

� revoked the instrument of appointment of proxy; or

� transferred the QMS Shares in respect of which the vote was cast,

unless QMS received written notice of the death, mental incapacity, revocation or transfer before the meeting, or, if applicable, the resumption of any adjourned meeting.

Your appointment of a proxy does not preclude you from attending in person and voting at the General Scheme Meeting instead of your proxy. In this scenario the appointment of your proxy is not revoked but your proxy must not speak or vote at the meeting while you are present.

Voting by attorneyTo vote by attorney, you must deliver to the Share Registry a duly executed power of attorney, specifying the General Shareholder’s name, the attorney, the meetings at which the appointment may be used and that the power of attorney applies in relation to QMS, by no later than 48 hours before the General Scheme Meeting.

The appointment may be a standing one and the attorney need not be a General Shareholder.

Persons attending the Scheme Meeting as an attorney should bring with them the original or a certified copy of the power of attorney under which they have been authorised to attend and vote at the General Scheme Meeting.

Your appointment of an attorney does not preclude you from attending in person and voting at the General Scheme Meeting. The appointment of your attorney is not revoked merely by your attendance and taking part in the General Scheme Meeting, but if you vote on a resolution, the attorney is not entitled to vote, and must not vote, as your attorney on that resolution.


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Voting by corporate representativeFor a body corporate to vote by corporate representative, the representative must have a duly executed appointment which complies with the requirements of the Corporations Act. The appointment may be a standing one. Unless the appointment states otherwise, the representative may exercise all of the powers that the appointing body could exercise at a meeting or in voting on a resolution. The representative must bring evidence of their appointment to the General Scheme Meeting, including any authority under which it is signed, unless it has previously been given to QMS.

Lodgement of proxies, authorities and powers of attorneyTo be effective, completed proxy forms, any authorities under which proxy forms are signed and powers of attorney must be received by the Share Registry in any of the following ways at least 48 hours before the time for holding the General Scheme Meeting (that is, by no later than 10.00am (Melbourne time) on Tuesday, 4 February 2020), or, if the General Scheme Meeting is adjourned, at least 48 hours before the scheduled resumption of the General Scheme Meeting:

� By post to:

Computershare Investor Services Pty LimitedGPO Box 1282 MelbourneVictoria 8060 Australia

� By facsimile to:

1800 783 447 (within Australia) +61 3 9473 2555 (from outside Australia)

� Online at the Computershare website notified in your proxy form

Jointly held securitiesIn the case of jointly held QMS Shares, only one of the joint General Shareholders is entitled to vote. If more than one General Shareholder votes in respect of jointly held QMS Shares, only the vote of the General Shareholder whose name appears first in the QMS Share Register (as a holder of QMS Shares) will be counted.

VotingVoting on the General Scheme Resolution set out in this Notice of General Scheme Meeting will be conducted by way of a poll. Every General Shareholder who is present in person or by proxy, representative or attorney will have one vote for each QMS Share held by that General Shareholder.


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ANNEXURE ENOTICE OF ROLLOVER SHAREHOLDERS SCHEME MEETING

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NOTICE OF ROLLOVER SHAREHOLDERS SCHEME MEETINGNotice is hereby given that, by an order of the Court made on Thursday, 12 December 2019 pursuant to section 411(1) of the Corporations Act, a meeting of Rollover Shareholders (excluding all other QMS Shareholders) will be held immediately following the General Scheme Meeting which is to be held at 10.00am on Thursday, 6 February 2020 at The RACV Club, 501 Bourke St, Melbourne VIC 3000 (this is the Rollover Shareholders Scheme Meeting).

Purpose of the Rollover Shareholders Scheme MeetingThe purpose of the Rollover Shareholders Scheme Meeting is to consider and, if thought fit, to agree to a scheme of arrangement (with or without modifications, alterations or conditions agree in writing between QMS and BidCo and approved by the Court or any modifications, alterations or conditions as are thought just by the Court to which QMS and BidCo agree in writing) to be made between QMS and QMS Shareholders and to consider and, if thought fit, to pass the Rollover Shareholders Scheme Resolution.

To enable you to make an informed voting decision, further information about the Scheme is set out in the accompanying explanatory statement (for the purposes of section 412(1) of the Corporations Act) which, together with this Notice of Rollover Shareholders Scheme Meeting, forms part of the Scheme Booklet.

Capitalised terms used in this Notice of Rollover Shareholders Scheme Meeting but not defined in it have the same meaning as set out in the Glossary in Section 11 of the Scheme Booklet.

Business of the Rollover Shareholders Meeting – Rollover Shareholders Scheme ResolutionTo consider and, if thought fit, to pass the following Rollover Shareholders Scheme Resolution in accordance with section 411(4)(a)(ii) of the Corporations Act:

“That pursuant to and in accordance with section 411 of the Corporations Act 2001 (Cth):

a. the Scheme, the terms of which are contained in and more particularly described in the Scheme Booklet (of which this Notice of Rollover Shareholders Scheme Meeting forms part) is agreed to (with or without any modifications, alterations or conditions agree in writing between QMS and BidCo and approved by the Court or any modifications, alterations or conditions as are thought just by the Court to which QMS and BidCo agree in writing); and

b. the directors of QMS are authorised, subject to the terms of the Scheme Implementation Deed:

i. to agree to any modifications, alterations or conditions with BidCo;

ii. to agree to any modifications, alterations or conditions as are thought just by the Court; and

iii. subject to approval of the Scheme by the Court, to implement the Scheme with any such modifications, alterations or conditions.”

ChairmanThe Court has directed that Wayne Stevenson is to act as Chairman of the Rollover Shareholders Scheme Meeting (and that, if Wayne Stevenson is unable or unwilling to attend, Robert Alexander is to act as Chairman of the Rollover Shareholders Scheme Meeting) and has directed the Chairman to report the result of the Rollover Shareholders Scheme Resolution to the Court.

Dated 13 December 2019

By Order of the QMS Board

Malcolm Pearce Company Secretary

ANNEXURE E – NOTICE OF ROLLOVER SHAREHOLDERS SCHEME MEETING

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EXPLANATORY NOTES FOR THE ROLLOVER SHAREHOLDERS SCHEME MEETINGGeneralThis Notice of Rollover Shareholders Scheme Meeting relates to the Scheme and should be read in conjunction with the balance of this Scheme Booklet. This Scheme Booklet contains important information to assist you in determining how to vote on the Rollover Shareholders Scheme Resolution, including the information prescribed by the Corporations Act and the Corporations Regulations.

A copy of the Scheme is set out in Annexure B.

Requisite MajoritiesThe Scheme can only proceed if, at the Rollover Shareholders Scheme Meeting, the Rollover Shareholders Scheme Resolution is passed. For this to occur, the Rollover Shareholders Scheme Resolution must be passed by:

� unless the Court orders otherwise, a majority in number of Rollover Shareholders who are present at the Rollover Shareholders Scheme Meeting and vote on the Rollover Shareholders Scheme Resolution, either in person or by proxy, attorney or representative; and

� at least 75% of the votes cast at the Rollover Shareholders Scheme Meeting by Rollover Shareholders on the Rollover Shareholders Scheme Resolution, either in person or by proxy, attorney or representative.

Court approvalIf the Rollover Shareholders Scheme Resolution (set out in this Notice of Rollover Shareholders Scheme Meeting) and the General Scheme Resolution (set out in the Notice of General Scheme Meeting) are approved by the Requisite Majorities, the implementation of the Scheme will be subject, among other things, to the subsequent approval of the Court. If both of these Scheme Resolutions are passed by the Requisite Majorities at the relevant Scheme Meetings, and the other conditions precedent to the Scheme (other than approval by the Court and lodgement of the Court orders approving the Scheme with ASIC) are satisfied or (if permitted) waived by the time required under the Scheme, QMS intends to apply to the Court for the necessary orders to give effect to the Scheme.

In order for the Scheme to become Effective, it must be approved by the Court at the Second Court Hearing and an office copy of the orders of the Court approving the Scheme must be lodged with ASIC. The Second Court Hearing is currently proposed to take place on Monday, 10 February 2020.

Entitlement to voteEach Rollover Shareholder who is registered (as a holder of QMS Shares) on the QMS Share Register at 5.00pm (Melbourne time) on Tuesday, 4 February 2020 is entitled to attend and vote at the Rollover Shareholders Scheme Meeting and will have one vote for each QMS Share they hold.

Voting at the Rollover Shareholders Scheme MeetingRollover Shareholders may vote on the Rollover Shareholders Scheme Resolution by:

� attending the Rollover Shareholders Scheme Meeting in person; or

� proxy, attorney or, in the case of a body corporate which is a Rollover Shareholder, corporate representative appointed in accordance with the Corporations Act.

Details in respect of each of these methods is set out below.

Voting in personTo vote in person, you must attend the Rollover Shareholders Scheme Meeting. If you attend, you will be admitted to the meeting and given a voting card at the point of entry to the meeting upon disclosing your name and address. Please bring a form of personal identification with you, such as your driver’s licence.


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Voting by proxyTo vote by proxy, you must complete and return the personalised proxy form enclosed with this Scheme Booklet or lodge your proxy online by no later than 48 hours before the Rollover Shareholders Scheme Meeting, in accordance with the instructions on the form. If your proxy is signed by an attorney, please also enclose the authority under which the proxy is signed (or a certified copy of the authority). A proxy need not be a Rollover Shareholder or a QMS Shareholder.

You may appoint an individual or body corporate as your proxy. If you appoint a body corporate as your proxy, that body corporate must ensure that it appoints a corporate representative to exercise its powers as proxy at the Rollover Shareholders Scheme Meeting (see below).

A Rollover Shareholder entitled to cast two or more votes at the Rollover Shareholders Scheme Meeting may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but, where the proportion or number is not specified, each proxy may exercise half of the votes.

The appointment may specify the proportion or number of votes that the proxy may exercise.

You can direct your proxy how to vote by following the instructions on the proxy form. If you do not direct your proxy how to vote, the proxy may vote, or abstain from voting, as he or she thinks fit. If you instruct your proxy to abstain from voting on an item of business, he or she is directed not to vote on your behalf, and the QMS Shares the subject of the proxy appointment will not be counted in computing the Requisite Majority.

If you return your proxy form:

� without identifying a proxy on it, you will be taken to have appointed the Chairman of the meeting as your proxy to vote on your behalf; or

� with a proxy identified on it but your proxy does not attend the meeting, the Chairman of the meeting will act in place of your nominated proxy and vote in accordance with any directions on your proxy form.

The Chairman of the meeting intends to vote all available proxies which appoint (or are taken to appoint) the Chairman in favour of the Scheme Resolution (in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interest of QMS Shareholders).

A vote cast in accordance with the appointment of a proxy is valid even if before the vote was cast the appointor:

� dies;

� becomes mentally incapacitated;

� revoked the instrument of appointment of proxy; or

� transferred the QMS Shares in respect of which the vote was cast,

unless QMS received written notice of the death, mental incapacity, revocation or transfer before the meeting, or, if applicable, the resumption of any adjourned meeting.

Your appointment of a proxy does not preclude you from attending in person and voting at the Rollover Shareholders Scheme Meeting instead of your proxy. In this scenario the appointment of your proxy is not revoked but your proxy must not speak or vote at the meeting while you are present.

Voting by attorneyTo vote by attorney, you must deliver to the Share Registry a duly executed power of attorney, specifying the Rollover Shareholder’s name, the attorney, the meetings at which the appointment may be used and that the power of attorney applies in relation to QMS, by no later than 48 hours before the Rollover Shareholders Scheme Meeting.

The appointment may be a standing one and the attorney need not be a Rollover Shareholder or a QMS Shareholder.

Persons attending the Scheme Meeting as an attorney should bring with them the original or a certified copy of the power of attorney under which they have been authorised to attend and vote at the Rollover Shareholders Scheme Meeting.

Your appointment of an attorney does not preclude you from attending in person and voting at the Rollover Shareholders Scheme Meeting. The appointment of your attorney is not revoked merely by your attendance and taking part in the Rollover Shareholders Scheme Meeting, but if you vote on a resolution, the attorney is not entitled to vote, and must not vote, as your attorney on that resolution.


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Voting by corporate representativeFor a body corporate to vote by corporate representative, the representative must have a duly executed appointment which complies with the requirements of the Corporations Act. The appointment may be a standing one. Unless the appointment states otherwise, the representative may exercise all of the powers that the appointing body could exercise at a meeting or in voting on a resolution.

The representative must bring evidence of their appointment to the Rollover Shareholders Scheme Meeting, including any authority under which it is signed, unless it has previously been given to QMS.

Lodgement of proxies, authorities and powers of attorneyTo be effective, completed proxy forms, any authorities under which proxy forms are signed and powers of attorney must be received by the Share Registry in any of the following ways at least 48 hours before the time for holding the Rollover Shareholders Scheme Meeting (that is, by no later than 10.00am (Melbourne time) on Tuesday, 4 February 2020), or, if the Rollover Shareholders Scheme Meeting is adjourned, at least 48 hours before the scheduled resumption of the Rollover Shareholders Scheme Meeting:

� By post to:

Computershare Investor Services Pty LimitedGPO Box 1282 MelbourneVictoria 8060 Australia

� By facsimile to:

1800 783 447 (within Australia) +61 3 9473 2555 (from outside Australia)

� Online at the Computershare website notified in your proxy form

Jointly held securitiesIn the case of jointly held QMS Shares, only one of the joint Rollover Shareholders is entitled to vote. If more than one Rollover Shareholder votes in respect of jointly held QMS Shares, only the vote of the Rollover Shareholder whose name appears first in the QMS Share Register (as a holder of QMS Shares) will be counted.

VotingVoting on the Rollover Shareholders Scheme Resolution set out in this Notice of Rollover Shareholders Scheme Meeting will be conducted by way of a poll. Every Rollover Shareholder who is present in person or by proxy, representative or attorney will have one vote for each QMS Share held by that Rollover Shareholder.


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QMS MEDIA LIMITED | SCHEME BOOKLET224 CUMBERLAND COUNCIL | REQUEST FOR TENDER8

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Documents

214 Park Street South Melbourne, VIC 3205 ASX Release For ... · 214 Park Street South Melbourne, VIC 3205 T +61 3 9268 7000 ASX Release. 13 December 2019 . SCHEME BOOKLET REGISTERED